RWE AG Annual Report 2017

FY2017 Annual Report · RWE AG

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Powering. Reliable. Future.
Yesterday, today and tomorrow.

Annual Report 2017

A reliable partner for
the energy transition

When RWE started supplying Germany with electricity 120 years ago, the modern industrial
age was just starting. We have pushed ahead with electrification, played our part in shaping
the development of industry and prepared for the energy of the future with foresight.

Electricity is the lifeblood of our modern digitised society. It is the source of prosperity
and progress. Electricity gives us light, heating, industrial production, communications,
medical services, mobility and much, much more. And, now, as in the past, RWE plays a key
role in all of this.

Our world is increasingly electric. This is a trend which goes beyond mere digitisation.
More and more households are heated with electricity and more and more drivers charge
their cars instead of filling them. At the same time, the demands faced by utilities
continue to grow and evolve. Society expects energy to be produced in an increasingly
environmentally friendly manner, paving the way to creating a sustainable energy system.
The modern vision is that most electricity will be generated from solar, wind and hydroelectric
power – energy sources which are at the mercy of the elements. At the same time, demand
for energy will continue to grow. Despite this, electricity always has to be available when
it is needed. At affordable prices.

These are huge challenges. But, working as a team, we have overcome much bigger hurdles
in the past. At RWE, we do not merely support the transformation of the energy sector,
we make it possible. Our modern power plants partner with renewables, adjusting flexibly
to the ups and downs in wind and solar generation, making an important contribution to
security of supply.

A world undergoing fundamental change needs a strong, reliable partner, conscious of its
responsibility to play its part in this modern transformation. That’s why RWE has thousands
of employees, working passionately for a common goal...

... now as in the past:

Powering. Reliable. Future.

Our title picture blends the past with the future. At the same site where Rheinisch-Westfälische Elektrizitätswerk was founded
on 25 April 1898, we will be opening our new corporate headquarters in the spring of 2020 to the north of Essen city centre.
This is where we commissioned our first power station in 1900 at the site of the Victoria Mathias colliery. All of RWE’s
employees in Essen will unite at this new location, where we will continue to pursue our goal of powering a reliable future.

CONTENTS

To our investors
Interview with the CEO
The Executive Board of RWE AG
Supervisory Board report
RWE on the capital market

Combined review of operations
Strategy and structure
Innovation
Economic environment
Political environment

1
1.1
1.2
1.3
1.4
1.5 Major events
1.6
1.7
1.8

Business performance
Financial position and net worth
Notes to the financial statements of
RWE AG (holding company)
Presentation of the RWE Group with
innogy as a pure financial investment

1.9

1.10 Disclosure relating to
German takeover law
1.11 Compensation report
1.12 Development of risks and opportunities
1.13 Outlook

Responsibility statement

3
6
8
13

17
18
25
28
34
37
41
52

61
63
74
83

3
3.1
3.2
3.3
3.4
3.5
3.6
3.7

3.8
3.9
3.10

Consolidated financial statements
Income statement
Statement of comprehensive income
Balance sheet
Cash flow statement
Statement of changes in equity
Notes
List of shareholdings
(part of the notes)
Boards (part of the notes)
Independent auditor‘s report
Information on the auditor

Further information
Five-year overview
Imprint
Financial calendar

87
88
89
90
91
92
93

153
185
190
196

197
198
199

2017 KEY FIGURES AT A GLANCE

RWE Group

Power generation

External electricity sales volume

External gas sales volume

External revenue

Adjusted EBITDA

Adjusted EBIT

Income before taxes

Net income

Adjusted net income

Cash flows from operating activities

Capital expenditure

Property, plant and equipment and intangible assets

Financial assets

Free cash flow1

billion kWh

€ million

Number of shares outstanding (annual average)

thousands

Earnings per share

Adjusted net income per share

Dividend per common share

Dividend per preferred share

Net debt

Workforce3

2017

2016

202.2

261.1

254.1

44,585

5,756

3,646

3,056

1,900

1,232

– 1,754

2,629

2,260

369

– 3,849

614,745

3.09

2.00

1.502

216.1

264.6

265.1

45,833

5,403

3,082

– 5,807

– 5,710

777

2,352

2,382

2,027

355

809

614,745

– 9.29

1.26

–

0.13

€

€ million

31 Dec 2017

31 Dec 2016

20,227

59,547

22,709

58,652

+/–
%

– 6.4

– 1.3

– 4.1

– 2.7

6.5

18.3

152.6

133.3

58.6

– 174.6

10.4

11.5

3.9

– 575.8

–

133.3

58.7

–

– 10.9

1.5

1 Changed term; see explanation on page 56.
2 Dividend proposal for RWE AG’s 2017 fiscal year, subject to the passing of a resolution by the 26 April 2018 Annual General Meeting.
3 Converted to full-time positions.

To our investors > Interview with the CEO

“POWERING. RELIABLE. FUTURE. – THIS IS RWE”

But looking back at last year, we mustn’t lose sight of one thing:
the government refunded RWE the 1.7 billion euros in nuclear
fuel tax payments made in the past. At the beginning of June,
just before your 60 th birthday, the German Constitutional Court
announced that the tax was null and void. Did that feel like an
early birthday present?
When the judgement was pronounced, I really did think:
“What a great birthday present!” Another one of my initial
reactions was: It’s great that the justice system still works.
This is my personal opinion. From the company’s point of
view, the refund is a big financial boost. However, we will
pass some of the funds on to our shareholders. Holders of
RWE common shares didn’t receive a dividend the last two
times around, and our preferred shareholders only received
the minimum share in profits. By paying a special dividend
of one euro – in addition to the normal dividend of 50 cents –
we want to thank them for their patience and loyalty. Of
course, this is all subject to the approval of the Annual
General Meeting.

Let’s stick with nuclear energy: RWE transferred the liability
for the costs of interim and final storage to the federal
government and in exchange paid about 7 billion euros to the
new state disposal fund. Does that deal with nuclear energy
once and for all?
No, by no means. First of all, we have to ensure the safe
operation of our power plants until 2022. It will also take
some time to dismantle them. This demanding task will
keep us busy for at least 20 years. Despite this, the legal
reorganisation of nuclear waste management was a
milestone. As processing and financing interim and final
storage are now handled by one entity – the federal
government – major risks which we faced previously have
been eliminated. Otherwise, politicians could have
drawn out the search for a final storage site indefinitely,
demanding that the additional costs be covered by the
energy companies. The principle that applies now is: those
in charge of processing also bear the costs. In addition,
now we know exactly where our responsibility ends and the
government’s starts, as we clarified the details in a contract.
Admittedly, the 7 billion euros was a high price to pay to
transfer the liability to the state. This is much more than the
provisions we had formed for interim and final storage. But
the legal certainty this gave us was worth it.

Rolf Martin Schmitz on the security of German electricity
generation, RWE’s climate protection roadmap and the
company’s earnings prospects

Mr. Schmitz, 2017 was year one after innogy’s public listing
and your appointment as CEO of RWE. What would you say
looking back on 2017?
We can be quite proud of our accomplishments last year. We
gave RWE a strategy that is clear to and accepted by the
public and the capital market. Our motto is ‘Powering. Reliable.
Future.’ – this is RWE. This is what we’re about. Things also
went well in operating terms. Adjusted EBITDA, our most
important earnings indicator, was even better than forecast,
amounting to 5.8 billion euros. Our share also performed well.
RWE’s common stock increased by 44 percent in 2017,
making it the third-strongest share in the DAX. Last but not
least, teamwork across the new RWE is blossoming and I’m
extremely happy about that. This is a very good basis for 2018.

You touched on the good development in operating terms.
What were the main success factors?
There were several: the most important factor in quantitative
terms was the significantly improved performance of the
trading business after its poor showing in 2016. In addition,
we achieved above-average income from the commercial
optimisation of our power plant deployment. By the way,
this was one of the reasons why our EBITDA exceeded
expectations. And we mustn’t forget our ongoing cost-
cutting programme: in 2017, we already achieved more
than half of our target volume for 2019. I’m especially proud
of that, because it shows that we work hard to achieve
success and demonstrates that our employees are our most
valuable asset. They did an outstanding job in 2017.

4 RWE Annual Report 2017

Nevertheless, RWE is still exposed to substantial political risks.
Just think of the exit from coal. Were you relieved that
the coalition agreement between the Christian Democrats/
Christian Social Union and the Social Democrats remains
vague on this point?
I would be relieved if we had a clear and, most importantly,
reliable regulatory framework for our coal-fired power stations.
This is important for us to be able to shape the structural
change in the Rhenish lignite mining region in a way that
is both economically viable and socially acceptable. This
structural change is a long-term process for which we need
certainty with regard to planning. But the coalition agreement
does give reason to be optimistic: the framework and details
of the exit from coal will be established by a commission.
This can be useful if it is an open and constructive process.
Renouncing the German emission reduction target for 2020 was
also a good move. It is useless to parade unachievable goals.

However, the new government parties set reduction goals for
every branch of industry for 2030, which are very ambitious.
They require the energy sector to lower its greenhouse gas
emissions more than the average: by over 60 % compared to
1990. Is that even possible?
The real question is, “At what price?” Therefore, we must get
together to come up with a way of achieving this goal
intelligently, without putting security of supply at risk
or creating big divides in industrial policy. This is an
ambitious task for the commission which will have to address
this matter. The commission’s name “Growth, Structural
Change and Employment” gives reason to hope that economic
and social matters will play a central role.

The government is obviously considering determining a fixed
date for putting a halt to electricity generation from coal.
What do you think of this?
Not much. No one can predict how the world will have
changed by 2040 or 2050. Just consider the change we have
experienced in the last 20 years alone. Politicians should
set realistic emission-reduction goals and create a framework
which ensures that these goals are achieved. It should be
left up to the companies how they adapt to this framework
and which technologies they use. Over-regulation is always
counterproductive.

What do you tell environmental activists, politicians and investors
who accuse you of not doing enough to combat climate change?
I explain to them that RWE already has a roadmap for
reducing emissions, which is in line with the goals of the Paris
Climate Convention. We aim to reduce our carbon dioxide
emissions by between 40 and 50 percent by 2030 compared
to 2015. We are serious about this, as demonstrated by our
recent past: we have reduced emissions every year since 2012.

They dropped by 11 percent in 2017 alone. The most
important pillar of our emission reduction strategy is the
phase-out of lignite production. We also have a clear
roadmap for this. In October 2017, we put the first two
lignite units into standby: they have not generated any
electricity since then. The next two units will follow this year.
By 2030, we will have closed the first of our three opencast
mines as well as the nearby Weisweiler power station. After
that, by the middle of the century, electricity generation
from lignite in the Rhineland will be history.

Nevertheless, you have reason to fear that policymakers may
find that this roadmap isn’t ambitious enough.
I tip my hat to all other sectors like heating and transportation
that manage to reduce emissions as fast as us. Of course,
every once in a while, politicians will call for additional power
plant closures, as was recently the case with the exploratory
talks for a government made up of the Christian Democratic
Union/Christian Social Union, the Green Party and the Free
Democratic Party. But we mustn’t lose sight of reality:
last year alone, six coal units were shut down in Germany.
Another ten will probably follow by 2020. Furthermore,
Germany is phasing out nuclear energy at the same time.
If the predictions of the four German transmission system
operators materialise, in two years the country may face
situations where it cannot meet its demand for electricity from
its own production. The expansion of renewables doesn’t
help much here, as solar and wind farms do not generate
electricity reliably. The situation may become dire once the
nuclear phase-out has been completed at the end of 2022, if
not earlier. It would be risky to rely on other countries as they
are also shutting down power plants and renewables are on
the rise there. By then, the dark doldrums as experienced in
January 2017 could also cause problems for our neighbours.

To our investors > Interview with the CEO

What does this mean in terms of the dividend: Will RWE
shareholders have to wait another two years for the regular
dividend to be raised above 50 euro cents?
When proposing the dividend, we orientate ourselves more
to the medium-term earnings prospects and less towards
the electricity price we achieved in the past. My fellow board
member Markus Krebber and I intend to propose an increased
regular dividend of 70 euro cents for fiscal 2018. Therefore,
our shareholders will feel the recovery of electricity prices a
little earlier than our books.

A brief word about innogy: the profit warning in December 2017
led to a loss in trust on the capital market. What do you expect
of management?
Right after the profit warning, the Supervisory Board of
innogy made a statement on it. It believes that our subsidiary’s
strategy is right, but wants more cost discipline and a more
focused growth and investment strategy. We endorse this
and it is in the interests of our own shareholders. We
mustn’t forget that the significant drop in innogy’s share
price following the profit warning also dragged down the
RWE share price. innogy announced that it will limit net
investments to 2.5 billion euros this year. All capital
expenditure exceeding this limit must be financed by selling
assets or investments. I welcome this – and the fact that
our subsidiary wants to keep the dividend constant at
1.60 euros compared to 2017.

Irrespective of the developments at innogy, what is the biggest
challenge for the RWE Group in the current fiscal year?
We must do our homework with as much vigour as before. The
most important task remains reducing costs in conventional
electricity generation. We expect that generation capacity
will become tighter and that this will stimulate electricity
prices. But we haven’t reached that point yet and until then,
we must do everything we can to secure the profitability of
our power stations. On the political stage, the talks on
Germany’s exit from coal will be of utmost importance. What
I wish for in general is more recognition for what we stand
for. We make sure that there is always as much electricity as
necessary – every day, hour and second. This is not a walk in
the park. It’s a demanding task that throws up increasingly
bigger challenges. If politicians realise and reward this, I am
confident that they will chart the right course.

Nevertheless, the Dutch government aims to exit from coal
by 2030 and wants to introduce a minimum price for carbon
dioxide in the Netherlands.
To be honest, none of this seems logical to me, not even
the minimum price for carbon dioxide. One of the major
political moves last year was the EU’s strengthening of the
European Emission Trading System. The system was modified
to enable the participating sectors to achieve the greenhouse
gas emission goals for 2030. The reform was the main reason
why emissions certificates cost twice as much today as they
did a year ago. In February, they achieved the ten euro
mark. This demonstrates that emissions trading works and
I ask myself why there should still be a need for national
carbon taxes. Such solo efforts will only shift emissions abroad.
But the climate doesn’t respect country borders. Effective
climate protection should keep the whole of Europe in mind
and, ideally, be global.

One of the positive developments last year was the turnaround
in German wholesale electricity forwards after the record
lows in the beginning of 2016. When will we see this reflected
in our books?
I wouldn’t speak of a turnaround yet: electricity prices slipped
again at the beginning of 2018. What is true is that 2017
was a good year with regard to the development of electricity
forwards. However, it will take a while for this to become
visible in our earnings. We sell the electricity from our power
stations up to three years in advance. As a result, changes in
market prices are reflected in our books with a significant
time lag. This was very advantageous to us when electricity
prices plummeted from 2008 to the beginning of 2016.
Now we face the opposite situation.

Does this mean that the RWE Group’s earnings will decline
this year?
Yes, it’s safe to assume that. We realised an average price of
31 euros per megawatt hour with our German lignite-fired and
nuclear power stations for 2017. The comparable figure for
2018 is three euros below that. Based on about 90 terawatt
hours of electricity generated, this represents a shortfall of
nearly 300 million euros. Furthermore, the Gundremmingen B
nuclear power station, which we had to shut down at the
end of 2017, stopped contributing to earnings. Moreover, I do
not believe that income from the optimisation of our power
plant dispatch will be as high as last year. Earnings achieved
by innogy will probably not match the 2017 level, either. We
forecast adjusted EBITDA of 4.9 billion to 5.2 billion euros
for the RWE Group, much less than in 2017. However,
I hope that we have reached the low point in conventional
electricity generation and that things will pick up no later
than 2020.

6 RWE Annual Report 2017

THE EXECUTIVE BOARD OF RWE AG

Dr. Rolf Martin Schmitz
Dr. Markus Krebber

To our investors > The Executive Board of RWE AG

Dr. Rolf Martin Schmitz
Chairman of the Executive Board
and Chief Executive Officer

Dr. Markus Krebber
Chief Financial Officer

Born in 1957 in Mönchengladbach; doctorate in engineering;
Planning Engineer at STEAG AG from 1986 to 1988; various
positions, including Head of Corporate Development and
Economic Policy, at VEBA AG from 1988 to 1998; Member
of the Executive Board of rhenag Rheinische Energie AG
from 1998 to 2001; Member of the Board of Management
of Thüga AG from 2001 to 2004; Chairman of the Board of
Directors of E.ON Kraftwerke GmbH from 2004 to 2005;
Chairman of the Executive Board of RheinEnergie AG and
Managing Director of Stadtwerke Köln from 2006 to 2009;
Chief Operating Officer National of RWE AG from May 2009
to September 2010; Chief Operating Officer of RWE AG from
October 2010 to October 2016 and concurrently Deputy
Chairman of the Executive Board of RWE AG from July 2012
to October 2016; Chairman of the Executive Board and Chief
Executive Officer of RWE AG since October 2016; concurrently
Labour Director of RWE AG since May 2017.

Born in 1973 in Kleve; Banker; doctorate in economics;
Management Consultant at McKinsey & Company from 2000 to
2005; various management positions at Commerzbank AG
from 2005 to 2012; Managing Director and Chief Financial
Officer of RWE Supply & Trading GmbH from November 2012
to August 2016; Chief Executive Officer of RWE Supply &
Trading GmbH from March 2015 to May 2017; Chief Financial
Officer of RWE AG since October 2016.

Group-level responsibilities
• Accounting
• Business Services
• Controlling & Risk Management
• Finance & Credit Risk
• Investor Relations
• Portfolio Management /Mergers & Acquisitions
• Tax

Group-level responsibilities
• Corporate Business Development
• Corporate Transformation
• Group Communications & Public Affairs
• Group Strategy
• Human Resources
• Internal Audit & Compliance
• Legal

8 RWE Annual Report 2017

SUPERVISORY BOARD REPORT

“After the reorganisation that took place in 2016,
the task at hand last year was to bring
the Group’s new structure to life and
sharpen the profiles of both RWE and innogy.
We accomplished this wonderfully.”

Fiscal 2017 was the first full financial year for the RWE Group in its new organisational structure: the RWE subsidiary innogy
looked after the renewable energy, grids and retail businesses, while the parent company focused on conventional power
generation and energy trading. RWE AG was very happy with the way last year went. The starting point was the company’s
refinement of its strategy. RWE AG has summed up its business model nicely: ‘Powering. Reliable. Future.’ RWE is a guarantor
of a reliable supply of electricity. This topic is still not considered sufficiently in debates on the energy industry, but it will
become more important, as security of supply is a product with a future – and those who offer such products have a future
themselves. One of the positive developments last year was the continued recovery of German wholesale electricity forward
prices. This has made the long-term earnings prospects in conventional electricity generation more favourable, despite the
persistent uncertainties surrounding energy policy. In addition, RWE’s financial position improved. This was predominantly
because the government had to refund the nuclear fuel tax RWE had paid in earlier years. Operational factors also played a
role, e. g. the continued cost reductions and the revitalised trading business. They were instrumental in the Group meeting –
and in some cases beating – its profit targets. This positive accomplishment is rounded off by the encouraging development
of our share price: RWE common stock was among the top performers in the DAX in 2017.

Now let me go into the work we did on the Supervisory Board in the financial year that just ended. Once again, we fulfilled
all of the duties imposed on us by German law and the Articles of Incorporation. We advised the Executive Board on running
the company and monitored its actions attentively. Moreover, we were consulted on all fundamental decisions. The Executive
Board informed us of all material aspects of business developments, the earnings situation as well as the risks and the
management thereof both verbally and in writing. This was done regularly, extensively and in a timely fashion. Decisions
were taken on the basis of detailed reports and draft resolutions submitted by the Executive Board. The Supervisory Board
had ample opportunity to concern itself with these in its plenary sessions and its committees. We were also informed by the
Executive Board of projects and transactions of special importance or urgency between meetings.

To our investors > Supervisory Board report

We passed the resolutions required of us by law or the Articles of Incorporation. Where necessary, we did so by circular.
As Chairman of the Supervisory Board, I was constantly in touch with the Chairman of the Executive Board, enabling us to
discuss events of material significance to the Group’s situation and development without any delay.

Last year, the Supervisory Board convened for five ordinary meetings. The shareholder and employee representatives on the
Supervisory Board consulted on the agenda items of the plenary sessions in advance. The following table provides an overview
of the attendance of the members of the corporate bodies at the meetings of the Supervisory Board and its committees:

Attendance at meetings in fiscal 2017
by Supervisory Board member1

Supervisory
Board

Executive
Committee

Audit
Committee

Dr. Werner Brandt, Chairman

Frank Bsirske, Deputy Chairman

Reiner Böhle

Sandra Bossemeyer

Ute Gerbaulet (since 27 April)

Reinhold Gispert (since 27 April)

Arno Hahn (until 27 April)

Andreas Henrich

Prof. Dr. Hans-Peter Keitel

Dr. h. c. Monika Kircher

Martina Koederitz (until 27 April)

Monika Krebber

Harald Louis

Dagmar Mühlenfeld

Peter Ottmann

Günther Schartz

Dr. Erhard Schipporeit

Dr. Wolfgang Schüssel

Ullrich Sierau

Ralf Sikorski

Marion Weckes

Leonhard Zubrowski

5/5

2/5

5/5

3/3

2/2

4/5

0/2

5/5

1/1

5/62

3/3

6/6

5/6

6/6

5/6

Personnel
Affairs
Committee

4/4

1/4

4/4

Nomination
Committee

Strategy
Committee

1/1

2/2

1/1

2/2

1 Attendance is indicated by the ratio of the number of meetings attended by the Supervisory Board member to the total number of meetings during the individual’s term

as a member of the corporate body in question. Only the committees that convened in the year under review are listed.

2 Werner Brandt was no longer a member of the Audit Committee in 2017, but attended meetings as a guest.

Main points of debate of the Supervisory Board meetings. In all five meetings we were informed by the Executive Board
of RWE’s financial situation as well as of major political and economic developments relevant to the company, and assisted
the Board by providing advice. Now I would like to address the main points of our sessions in more detail.

• We dedicated our meeting on 8 March 2017 to RWE AG’s future strategic orientation within the operating activities for which

the company is responsible. The Executive Board informed us about this extensively and presented us with RWE’s new motto
‘Powering. Reliable. Future.’ Other subjects discussed were the financial statements of the parent company for fiscal 2016,
the agenda of the Annual General Meeting of 27 April 2017, and the appointment of the independent auditors for fiscal 2017.

10 RWE Annual Report 2017

• At the second meeting, which was held on the day before the Annual General Meeting, the Executive Board reported on
matters of energy policy, e. g. the new EU limits for nitrous oxide and mercury emissions of power plants and the German
Act on the Modernisation of the Grid Fee Structure. More detailed commentary on this can be found on page 34 et seq. We
were also informed thoroughly of the development of economic framework conditions such as wholesale electricity prices,
and of the capital market’s view of our company and its strategy.

• Current developments in nuclear energy were the focus of our third meeting, which took place on 23 June 2017. We

concerned ourselves in detail with the law on the reorganisation of responsibility for nuclear waste disposal, which had
entered into force a week before. Also on the agenda was the public law contract occasioned by the aforementioned
law between RWE and the Federal Republic of Germany that envisages legally securing the transfer of liability for interim
and final storage costs to the federal government. In this context, we also explored proposals made by the Executive Board to
reorganise RWE’s nuclear energy business and charged it with implementing the presented concept. Another topic was
the German Constitutional Court’s ruling that the German nuclear fuel tax was null and void. In this matter, we advised the
Executive Board on the use of the refunded taxes.

• In our fourth session, which took place on 22 September 2017, we addressed non-financial reporting. This became legally
mandatory for German listed companies with more than 500 employees for financial years beginning after 31 December 2016.
We concerned ourselves extensively with the new legal requirements, determined the contents of RWE’s non-financial
report, and passed the resolution to submit it to an external auditor. A further important subject was the conditions in
Colombia’s hard coal mines and RWE’s involvement in the Bettercoal initiative, which promotes improvement in the global
supply chain. In the same meeting, we also discussed the new recommendations of the German Corporate Governance Code
(GCGC), which were published in the German Federal Gazette on 24 April 2017. RWE has pre viously essentially met the
additional requirements. Nevertheless, we took the changes to the Code as an opportunity to introduce a provision into our
Rules of Procedure on the Chairman of the Supervisory Board’s communication with investors. Furthermore, we refined the
competency profile for members of the Supervisory Board, establishing that at least six shareholder representatives have
to be independent. More detailed information on this can be found in our latest Corporate Governance Report, which
has been published on the internet at www.rwe.com/corporate_governance. The statement of compliance issued by the
Executive Board and the Supervisory Board of RWE AG on 14 December 2017 can also be found there. RWE fully complied
with the recommendations of the version of the Code before and after its amendment in 2017.

• One of the recommendations of the GCGC is that the Supervisory Board regularly subject its work to an efficiency audit.

We conducted such a test in the fourth quarter of 2017, and its results were the topic of our fifth meeting, which was held
on 14 December 2017. The audit confirmed that we work together very constructively and trustingly. However, it also
high lighted room for improvements, the implementation of which we debated extensively. Another point of focus of that
meeting was the Executive Board’s planning for 2018 and its outlook for the two following fiscal years. The members of
the Executive Board answered our questions in this regard and explained important issues clearly. We adopted the
company’s planning following a thorough review.

Supervisory Board committees. Last year, the Supervisory Board had six standing committees and the project-related
NewCo IPO Committee, which was created at the end of 2015 in order to assist in the placement of innogy shares in the
capital market. These committees are charged with preparing topics and resolutions for Supervisory Board meetings. In
certain cases, they exercise decision- making powers conferred on them by the Supervisory Board. The committee chairmen
regularly informed the Supervisory Board of their work. In the year under review, a total of 14 committee meetings were
held, on which I would like to report in more detail. Attendance by individual is presented in the table on page 9.

• The Executive Committee convened once. Its members discussed the company’s planning for fiscal 2018 as well as the

outlook for 2019 and 2020 in depth and prepared their adoption by the Supervisory Board.

To our investors > Supervisory Board report

• The Audit Committee was in session six times. It concerned itself extensively with the interim and annual financial
statements of RWE AG and the Group, together with the combined review of operations. The Committee discussed the
financial statements in detail with the Executive Board before they were published. The independent auditors participated
in the debates and reported on the results of their audit and/or audit-like review; at all times, the Committee was vigilant
that quality standards were adhered to. It submitted a recommendation to the Supervisory Board regarding the election
of the independent auditors for fiscal 2017 by the Annual General Meeting. Furthermore, it prepared the grant of the audit
award to the independent auditors including the fee agreement and set the priorities of the audit for fiscal 2017. The
Committee was regularly informed of the effectiveness of the accounting-related internal control system. This did not
reveal any issues that would call the effectiveness of the control system into question. Furthermore, the Committee dealt
with compliance and with the schedule and results of the internal audit. In this context, the Committee held consultations
on the new legal requirements imposed on the non-financial reporting of companies and prepared a resolution by the
Supervisory Board on this matter. New policies introduced by International Financial Reporting Standards (IFRS) were also
on the agenda. The Committee was regularly informed about the spot checks performed by the German Financial Reporting
Enforcement Panel (DPR) on the financial statements of the parent company and the Group for the period ending on
31 December 2016. The DPR did not find any errors. In addition, the Committee discussed the risk situation of the
RWE Group in the wake of the German Corporate Control and Transparency Act (KonTraG), data protection, cyber security
as well as legal and tax issues. In-house experts were consulted when necessary.

• During the year being reviewed, the Personnel Affairs Committee held four meetings, at which the staff-related decisions

of the Supervisory Board were prepared. Amongst the matters discussed were the level of bonuses and share-based
payments granted to the Executive Board.

• The members of the Nomination Committee convened in one session, in which they consulted on the candidates for the

by-elections to the Supervisory Board to be proposed at the Annual General Meeting on 27 April 2017.

• The Strategy Committee held two meetings. At the beginning of 2017, it assisted in the work performed by company

management on the continued development of the strategy, the results of which were presented to the Supervisory Board
in its March session. At its second meeting at the end of the year, the Committee was informed by the Executive Board
about the implementation of the new strategy.

• The Mediation Committee pursuant to Section 27, Paragraph 3 of the German Co-Determination Act did not have to

meet in 2017.

• The NewCo IPO Committee did not convene last year, either.

Conflicts of interest. The members of the Supervisory Board are obliged by law and the GCGC to immediately disclose any
conflicts of interest they have. No such notifications were made in the year under review.

Financial statements for fiscal 2017. PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft scrutinised and issued
an unqualified auditor’s opinion on the 2017 financial statements of RWE AG, which were prepared by the Executive Board in
compliance with the German Commercial Code, the financial statements of the Group, which were prepared in compliance
with IFRS pursuant to Section 315a of the German Commercial Code, the combined review of operations for RWE AG and
the Group, and the accounts. In addition, PricewaterhouseCoopers found that the Executive Board had established an
appropriate early risk detection system. The company was elected independent auditor by the Annual General Meeting on
27 April 2017 and commissioned by the Supervisory Board to audit the financial statements of RWE AG and the Group.

12 RWE Annual Report 2017

The annual report and the audit reports for 2017 as well as documents supporting the annual financial statements were
submitted to the members of the Supervisory Board in good time. Furthermore, the Executive Board commented on the
documents in the Supervisory Board’s balance sheet meeting of 7 March 2018. The independent auditors reported at this
meeting on the material results of the audit and were available to provide supplementary information. The Audit Committee
had previously concerned itself in depth with the financial statements of RWE AG and the Group, as well as audit reports,
during its meeting on 6 March 2018, with the auditors present. It recommended that the Supervisory Board approve the
financial statements as well as the appropriation of profits proposed by the Executive Board.

At its meeting on 7 March 2018, the Supervisory Board reviewed the financial statements of RWE AG and the Group, the
combined review of operations for RWE AG and the Group, and the Executive Board’s proposal regarding the appropriation of
distributable profit and the Group’s separate non-financial report. No objections were raised as a result of this review. As
recommended by the Audit Committee, the Supervisory Board approved the results of the audits of the financial statements
of RWE AG and the Group and approved both financial statements. The 2017 financial statements are therefore adopted. The
Supervisory Board concurs with the Executive Board’s proposal regarding the appropriation of profits, which envisages paying a
dividend of €1.50 per share bearing dividend entitlements. The sum consists of two components: the regular dividend of
€0.50 and a one-time special payment of €1.00 through which we would like RWE shareholders to benefit from the refund of
the nuclear fuel tax by the government.

Personnel changes in the Supervisory Board and Executive Board. In the year under review, we bade farewell to Martina
Koederitz and Arno Hahn, who left the Supervisory Board. They both retired from their office with effect from the end of the
Annual General Meeting on 27 April 2017. The Essen District Court appointed Reinhold Gispert to the Supervisory Board to
succeed Arno Hahn as employee representative. The Annual General Meeting appointed Ute Gerbaulet to the Super visory Board
as shareholder representative in place of Martina Koederitz. Another staff matter concerned Monika Kircher, who had been
appointed to the Supervisory Board by court order in October 2016. This appointment was replaced by an AGM resolution.
There was also a personnel change on the Executive Board of RWE AG: Uwe Tigges, who was responsible for human
resources and held the post of Labour Director, resigned from his office on the Executive Board as of the end of the day on
30 April 2017. Responsibility for human resources was assumed by the Chairman of the Executive Board Rolf Martin Schmitz.
The Supervisory Board appointed Rolf Martin Schmitz new Labour Director with effect from 1 May 2017. On behalf of the
Supervisory Board, I want to thank Martina Koederitz, Arno Hahn and Uwe Tigges for their commitment to the company and
wish them all the best for their future professional endeavours.

A good fiscal year – thanks to our employees. Having reported on our work in detail, I would now like to turn my attention
to RWE’s employees, whose dedication, motivation and skills played their part in the commercial success of the company yet
again in 2017. I would like to express my heartfelt thanks to you all – also on behalf of my colleagues. After the reorganisation
that took place in 2016, the task at hand last year was to bring the Group’s new structure to life and sharpen the profiles of
both RWE and innogy. We accomplished this wonderfully. Thanks to the 60,000 staff members throughout the Group, we
can look back on a good 2017 and look forward with confidence.

On behalf of the Supervisory Board

Dr. Werner Brandt
Chairman

Essen, 8 March 2017

To our investors > RWE on the capital market

RWE ON THE CAPITAL MARKET

Buoyed by the expansionary monetary policy of leading central banks and a robust economy, the DAX advanced by
13 % last year. At one point, it clearly surpassed the 13,000 point mark, recording an all-time high. RWE shares
performed even better: our common stock closed the year up 44 %. The development of our share price demonstrated
that the capital market’s trust in RWE’s financial strength has increased since innogy’s successful IPO. The refund
by the government of the nuclear fuel tax we had paid in earlier years and the continuation of the recovery of German
wholesale electricity prices were also received positively.

Performance of the RWE common share compared with the DAX
% (average weekly figures)

100

– 20

31 Dec 2016

RWE common share

DAX

31 M ar 2017

30 Jun 2017

30 Sep 2017

31 Dec 2017

Source: Bloomberg.

Positive sentiment on stock markets thanks to robust
economy. The German stock market continued its upward
trend in 2017. The DAX exceeded the 13,000 point mark
for the first time ever. Although it closed the month of
December slightly lower, at 12,918 points, it still achieved a
good performance for the year of 13 %. Major stimulus
came from the favourable economic trends in both Europe
and the USA. The leading central banks’ continued extremely
expansive monetary policy also contributed to the good
sentiment on stock markets. In the autumn, the US government
provided additional stimulus by passing a pro- economy tax
reform. The strong euro had a slightly dampening effect on
the development of the DAX, as it drove up the price of
exports from the European currency zone.

RWE common shares up 44 %. RWE investors benefited
from an especially strong return in 2017. Our common stock
increased in price by 44 % to €17.00 over the course of the
year. RWE preferred shares rose to €14.33; including the

preferred dividend of €0.13, they achieved a total return of
66 %. Our stock therefore clearly outperformed the STOXX
Europe 600 Utilities sector index (+10 %). They fared well
in part due to the reorganisation of the RWE Group and the
successful IPO of our subsidiary innogy last year. Since then,
investor trust in the financial solidity of RWE AG and the
future viability of its key business areas has improved
considerably. The increase in German wholesale electricity
prices also contributed to this. RWE shares gained additional
momentum when the German Constitutional Court ruled in
early June that the nuclear fuel tax was null and void (see
page 37). After the elections to the German Lower House of
Parliament in September, the talks to form the coalition
unsettled RWE investors because calls for an accelerated coal
phase-out were voiced. The RWE share experienced a severe
setback in December due to the profit warning issued by
innogy, which made a downward correction to its earnings
outlook for 2017 and 2018.

14 RWE Annual Report 2017

RWE share indicators

Earnings per share1

Adjusted net income per share1

Cash flows from operating activities per share1

Dividend per common share

Dividend per preferred share

Dividend payment

Dividend yield on common shares3

Dividend yield on preferred shares3

Common share price

End of fiscal year

High

Low

Preferred share price

End of fiscal year

High

Low

€

€ million

€

2017

3.09

2.00

– 2.85

1.502

9222

8.8

10.5

17.00

23.14

11.80

14.33

17.46

8.87

2016

– 9.29

1.26

3.83

–

0.13

–

1.5

11.82

15.95

10.17

8.72

11.61

7.95

2015

– 0.28

1.83

5.43

–

0.13

–

1.5

11.71

25.68

9.20

8.94

19.62

7.33

2014

2.77

2.09

9.04

1.00

615

3.9

5.3

25.65

32.83

24.95

18.89

25.61

18.89

2013

– 4.49

3.76

7.81

1.00

615

3.8

4.3

26.61

31.90

20.74

23.25

29.59

20.53

Number of shares outstanding (annual average)

thousands

614,745

Market capitalisation at the end of the year

€ billion

10.3

7.1

15.5

16.2

1 In relation to the annual average number of shares outstanding.
2 Dividend proposal for RWE AG’s 2017 fiscal year, subject to the passing of a resolution by the 26 April 2018 Annual General Meeting.
3 Ratio of the dividend per share to the share price at the end of the fiscal year.

Dividend proposal for fiscal 2017. The Supervisory and
Executive Boards of RWE AG will propose to the Annual
General Meeting on 26 April 2018 a dividend of €1.50 per
common and preferred share. The sum is made up of the
regular dividend of €0.50 and a special payment of €1.00
through which we want to enable our shareholders to
benefit from the nuclear fuel tax refund.

Broad international shareholder base. At the end of 2017,
an estimated 86 % of the total of 614.7 million RWE shares
(including 39 million non-voting preferred shares) were held
by institutional investors, and 14 % were held by individuals
(including employees). Institutional investors from Germany
owned 29 % of RWE (previous year: 27 %). In other countries
on the European continent, this investor group held 14 %
(previous year: 20 %) of RWE’s subscribed capital. In North
America, the United Kingdom and Ireland, it accounted for
a combined 40 % (previous year: 35 %). RWE AG’s single-
largest shareholders are RW Holding, in which municipalities
have pooled their shares, KEB Holding, which is backed by
the City of Dortmund, and the US asset management company
BlackRock. Based on their latest voting right notifications,
the three companies each held about 5 % of the voting

rights. At the end of 2016, a large portion of the RWE shares
held by municipalities was still pooled in RWEB GmbH,
which accounted for 14 % of the voting rights. However, this
pooling was reversed last year. The free float of our
common shares considered by Deutsche Börse in terms of
index weighting was 89 % at year-end. Only the shares
held by RW Holding and KEB Holding were deducted. Stakes
held by asset management companies like BlackRock are
classified by Deutsche Börse as free float as long as they do
not exceed 25% of the capital stock.

About 1 % of RWE shares are owned by our current and former
staff members. Last year, 4,900 people, or 35 % of all eligible
individuals, participated in RWE AG’s employee stock
ownership plan, buying a total of 340,920 common shares.
The programme enables the employees of our German
subsidiaries to take shares in the company on preferential
terms. We spent €3 million on this in the year under review.
The personnel of innogy SE and its subsidiaries were not
included in the employee stock ownership plan, as they qualify
for an innogy stock ownership plan, which was launched
in 2017.

To our investors > RWE on the capital market

Shareholder structure of RWE AG 1

1 % Employee shareholders

5 % KEB Holding AG

13 % Private shareholders

5 % RW Holding AG

5 % BlackRock, Inc.

71 % Other institutional shareholders

86 % Institutional shareholders:

29 % Germany
22 % USA/Canada
18 % UK/Ireland
14 % Continental Europe
excluding Germany

3 % Rest of the world

1 As of the end of 2017; percentages reflect shares in the subscribed capital.
Sources: RWE data and notifications of shareholders in accordance with the German Securities Trading Act (WpHG).

RWE represented on numerous stock markets. In Germany,
RWE shares are traded on the stock markets in Frankfurt
am Main, Düsseldorf, Berlin, Hamburg, Hanover, Munich and
Stuttgart, as well as via electronic platforms such as Xetra.
They are also available on some stock markets in the rest of
Europe. In the USA, instead of our shares being traded,

RWE is represented via American Depositary Receipts (ADRs)
in a Level 1 ADR programme. ADRs are share certificates
issued by US depositary banks, representing a certain number
of a foreign company’s deposited shares. Under RWE’s
programme, one ADR represents one common share.

Ticker symbols of RWE shares

Reuters: Xetra

Reuters: Frankfurt Stock Exchange

Bloomberg: Xetra

Bloomberg: Frankfurt Stock Exchange

German Securities Identification Number (WKN)

International Securities Identification Number (ISIN)

American Depositary Receipt (CUSIP Number)

Common share

RWEG.DE

RWEG.F

RWE GY

RWE GR

703712

DE0007037129

74975E303

Preferred share

RWEG_p.DE

RWEG_p.F

RWE3 GY

RWE3 GR

703714

DE0007037145

–

Combined review
of operations

18 RWE Annual Report 2017

1.1 STRATEGY AND STRUCTURE

The European energy sector is undergoing fundamental change and only utilities that evolve will survive over the long
term. Such a change has occurred at RWE – in both organisational and strategic terms. We started by strengthening
our renewable energy, grid and retail operations by pooling them in the new subsidiary innogy, which we listed on
the stock exchange. Then we explored how to position ourselves in conventional electricity generation and energy
trading over the long term. Our mission statement is to ensure security of supply in times of increasingly volatile
feed-ins of electricity from renewable sources. We are accomplishing this primarily with our flexible power plants.
Furthermore, we intend to take advantage of the opportunities that will arise due to the progress made in electricity
storage technologies.

RWE in a nutshell. The RWE Group is one of the leading
suppliers of electricity and gas in Europe. Through its
companies – including innogy – it covers all stages of the
energy value chain, running the gamut from lignite
production and electricity generation from gas, coal, nuclear
and renewables, to energy trading and the operation of
distribution networks as well as the supply of electricity, gas
and innovative energy solutions. In fiscal 2017, the Group
recorded revenue of €44.6 billion. The Group’s major markets
are Germany, the United Kingdom, the Benelux region and
Eastern Europe. In electricity generation from renewables, its
regional footprint is larger, including countries such as
Spain and Italy, and in the future the USA. A detailed
presentation of the Group’s structure and the segments’
operating activities can be found on page 20 et seqq.

New demands placed on energy utilities. The traditional
business model for energy utilities is increasingly coming
under pressure. With the continuing expansion of renewables,
the focus of conventional power generation in Europe is
shifting away from maximising the production of electricity
and moving towards providing adequate capacities which
can smooth out the fluctuations in solar and wind feed-ins.
As a result of this, revenue streams for power plants are
heading in the direction of market-oriented capacity payments
for security of supply. This trend has progressed quite a long
way in some European markets, such as the United Kingdom
for example. In Germany, however, politicians have decided
not to introduce a capacity market for the time being. A further
challenge is integrating the rising volume of decentralised
electricity feed-ins from renewables into the network. This
makes the grid business more complex technologically. In
the retail business, one of the main trends is that customers
want to use energy more efficiently and take advantage of
the opportunities opened up by digitisation. Furthermore,
households and businesses are producing more of their
own electricity and sometimes taking on the role of energy
managers who sell their power generation independently.

One Group – two future-oriented companies. We are
convinced that we will be best placed to rise to the challenges
of the changing energy sector if we reflect the various
aspects of these challenges in our organisational structure.
Therefore, we pooled the renewables, grid and supply
businesses in a new subsidiary called innogy SE and listed it
on the stock market. As part of the initial public offering,
73.4 million innogy shares from RWE AG’s holding and another
55.6 million shares from a capital increase by innogy SE
were placed with a wide range of investors. As a result,
RWE AG’s interest in innogy dropped to 76.8 %. Additional
information on this can be found on page 37 et seq. of the
2016 Annual Report.

With its mix of renewables, smart grids and innovative retail
solutions, innogy has excellent business potential and the
tools to be a driving force in transforming the energy sector.
Its listing has advantages in accessing financing on the
capital market. The proceeds of €2.0 billion from the capital
increase will mainly be used for growth projects. RWE AG
also benefits from this reorganisation, because it has given
the company additional financial flexibility. RWE AG used
the proceeds of €2.6 billion from the sale of innogy shares
to finance the new German nuclear energy fund (see page 35).

As a result of the reorganisation, RWE AG’s operating focus
now lies on conventional electricity generation and energy
trading. innogy is included in the consolidated financial
statements as a fully consolidated company, but in practice,
the company is held as a pure financial investment. A
comprehensive agreement guarantees innogy that it can
act independently in business matters and that RWE AG
will only exercise its influence as the majority owner by way
of the legally mandated bodies of the Supervisory Board and
the Annual General Meeting. Accordingly, innogy also decides
independently on its strategy. Our subsidiary provides more
detailed information on this in its latest annual report. We
also address this in this chapter, but mainly focus on
the business activities for which RWE AG is responsible in
operating terms.

Combined review of operations > Strategy and structure

Framework conditions for power plants remain difficult.
The reliable supply of electricity continues to be taken for
granted in our main generation markets, i. e. Germany, the
United Kingdom and the Benelux region. However, this is
increasingly being called into question by the progressive
expansion of renewable energy: electricity feed-ins dependent
on the weather and time of day have risen considerably as
a result of mounting wind and solar power capacity,
whereas the utilisation and profitability of conventional
power stations has tended to decrease. In Germany and
the Netherlands in particular, numerous power plants have
already been shut down temporarily or definitively because
they can no longer cover their operating costs. This trend
has slowed somewhat recently. However, over the long term,
conventional generation assets will certainly have much fewer
load hours than before with which to cover their fixed costs.

Political guidelines are another reason for the declining
amount of reliable generation capacity. The German
government accelerated the country’s nuclear phase-out
after the reactor accident at Fukushima in March 2011. At
present, seven nuclear power plants are in operation in
Germany, with a combined net capacity of 9.5 GW. Pursuant
to the German Nuclear Energy Act, they must be shut
down successively by the end of 2022. Electricity generation
from coal is also on the decline, as a result of the ambitious
climate protection goals in our core markets. For example,
the new Dutch government sets out in its coalition agreement
its intention to exit from coal completely by 2030. The
United Kingdom aims to achieve the same goal in the middle
of the next decade. Germany is also in the process of
reducing electricity generation from coal, even though the
room for manoeuvre is limited due to the nuclear phase-out. In
2015, it was decided to take eight German lignite-fired
power plants with a total net installed capacity of 2.7 GW
off the market. The stations – including five owned by RWE –
are successively being decommissioned from 2016 to 2019,
after which they will be on standby to ensure security of
supply for a period of four years each, before being shut
down for good. It cannot be ruled out that the new German
government will accelerate the exit from coal and force us to
shut down further stations.

According to surveys conducted by the German Association
of Energy and Water Industries (BDEW), conventional power
stations in Germany with over 20 GW in total installed net
capacity will have stopped operating by the end of 2022.
The German Network Agency also expects the number of
power stations to decrease substantially. Renewable generation
capacity is set to continue rising, but wind turbines and solar
panels cannot guarantee security of supply due to the
significant fluctuation in their utilisation. Electricity storage
technologies also rapidly reach their limits – at least at present.
It is impossible to predict if and when they will meet the
technical and commercial requirements needed in order to
make a major contribution to security of supply.

RWE’s strategic mission: we stand for security of energy
supply. Owing to the developments outlined above, the
reliability of electricity supply will become a critical factor in
the success of the energy transition. This is the basis of our
business model: we consider ourselves the backbone of
security of supply in our key regions. We express this with
our motto ‘Powering. Reliable. Future.’ This means that, in
the long run, our contribution to the supply of energy will
consist less of producing kilowatt hours and increasingly of
providing generation capacity when needed. We expect that
the security we provide will be compensated appropriately
sooner or later. This is already the case in the United
Kingdom, where a general capacity market was introduced
on 1 October 2017. In addition to revenue from electricity
sales, UK power plant operators receive a payment for
making their capacity available and therefore contributing to
security of supply. So far, German politicians have not
adopted the UK model, concentrating instead on improving
the functionality of the existing market. They believe that
phases of tight supply will result in price spikes that are
high enough to keep the required amount of generation
capacity on the market. Experts from the Federation of
German Industries (BDI) estimate that, in the long run,
back-up capacity of more than 80 GW will be needed to
ensure security of supply in Germany. We intend to cover a
portion of this primarily with our flexible power stations
to begin with, supplemented later by the increased use of
storage technologies to the extent that it is technically
possible and economically feasible to do so.

20 RWE Annual Report 2017

Group structure with three operating segments and the
financial investment innogy. RWE AG reorganised its core
business following the IPO of innogy SE. Since 2017, it
has consisted of three instead of the former two operating
segments (divisions). The former ‘Conventional Power
Generation’ Division has been split into the ‘Lignite & Nuclear’
and ‘European Power’ Divisions. To ensure comparability
between 2017 and 2016 figures, we also present the prior-
year figures according to the new structure. The third
operating segment is ‘Supply & Trading’ (formerly ‘Trading/
Gas Midstream’). This is only a change in name and does
not affect the nature of the business. The segment structure
is rounded off by innogy as the fourth division, which operates
independently. We state individual activities outside the
segments in the item ‘other, consolidation’. In particular,
this item currently includes RWE AG and its 25.1 % stake in
the transmission system operator Amprion.

We present the RWE Group’s four segments in more detail
below.

(1) Lignite & Nuclear. This is where we report our German
electricity generation from lignite and nuclear energy as well
as lignite production in the Rhineland. These activities are
overseen by RWE Power. This segment also includes our
50.9 % stake which we are about to sell in the Hungarian
company Mátra, which produces lignite and generates
electricity from this energy source. It also comprises our
interests in the Dutch nuclear power plant operator EPZ
(30 %) and in Germany-based URANIT (50 %), which holds a
33 % interest in the uranium enrichment specialist Urenco.

Due to their relatively low and stable fuel costs, lignite-fired
and nuclear power stations are primarily used for base load.
The significant decline in German wholesale electricity prices
seen from the middle of 2008 to the beginning of 2016
caused these assets to become much less profitable. By
reducing costs significantly, we managed to limit the earnings
shortfalls. We are continuing our austerity policy although
wholesale electricity prices have picked up again since then.
We want to reduce annual expenditure in the Lignite & Nuclear
segment by about €200 million until 2019 compared to
2016 with our current efficiency-enhancement programme.
We have already achieved a large part of this goal.

Lignite-fired and nuclear power stations will become a less
important part of our generation portfolio although their
earnings prospects are brighter now. This is largely due to
the framework established by energy policy in Germany. The
nuclear energy sector is on a legal phase-out schedule with
firm dates by which the stations have to be taken offline.
Accordingly, Unit B of our Gundremmingen nuclear power
plant was forced to stop producing electricity as of
31 December 2017. Since then, two RWE nuclear power
stations remain in operation: Gundremmingen C and
Emsland. We have permission to operate these stations until
the end of 2021 and the end of 2022, respectively, after
which they must also be shut down.

There is also a time limit on the use of lignite to generate
electricity. This is a result of European and national climate
protection goals. Germany aims to reduce greenhouse gas
emissions by between 80 % and 95 % by 2050 compared to
1990. Our strategy is in line with this very ambitious plan:
it envisages a complete exit from lignite-based power
generation by the middle of the century. The early shutdown
of our five lignite units mentioned earlier is a first step
in this direction. On 1 October 2017, units P and Q at
Frimmersdorf were put on standby, with units E and F at
Niederaussem to follow twelve months from then and unit C
at Neurath to follow another twelve months thereafter. Our
carbon dioxide emissions in the Rhenish lignite mining
region will therefore fall by some 15 % below the level seen
in 2015. We intend to increase this ratio to between 40 %
and 50 % by the end of the next decade, as coal reserves in
the opencast mine in Inden will have been depleted by
then and we will shut down the Weisweiler power station,
among other things. Thereafter, falling capacity utilisation
levels and closures of additional lignite-fired units will lead
to further declines in carbon dioxide emissions before our
most modern lignite-fired power plants are taken offline
when opencast mining comes to an end at Hambach and
Garzweiler.

(2) European Power. Our electricity generation from gas,
hard coal and biomass is subsumed under this segment.
Here, the geographic focus is on Germany, the United Kingdom
and the Benelux region. The segment also contains our 70 %
stake in the Denizli gas-fired power station in Turkey, some
hydroelectric power plants in Germany and Luxembourg and
RWE Technology International, which specialises in project
management and engineering services. All of these activities
are overseen by RWE Generation.

Combined review of operations > Strategy and structure

assets receive compensation under the German Combined
Heat and Power Act or as back-up power stations. We currently
plan to build an open-cycle gas turbine at Gundremmingen,
our Bavarian nuclear site, which would be used to stabilise
the grid. One prerequisite is that we place the winning bid in
the call for tenders for the project by the transmission
system operator in charge.

We do not plan to build new hard coal-fired power plants.
Besides this being unprofitable, political considerations also
play a role. In the Netherlands, where exiting from coal is
at the very top of the energy policy agenda, we want to
convert our Amer 9 and Eemshaven hard coal-fired power
stations for increased biomass co-firing. This will give us two
advantages: it will enable us to improve our carbon footprint
significantly and increase the acceptance of the power
stations among the public and political decision-makers.

We intend to make more use of storage technologies, with
a view to supplying people with energy reliably. Investing in
storage is usually unprofitable at present. One reason for
this is that the scarcity premiums obtainable on the market
are still too low and the available technologies are still too
costly because they are not mature. Nevertheless, we are
preparing to expand storage capacity by conducting pilot
projects. One example is the new 6 MW battery storage unit,
which we installed next to the Herdecke pumped storage
power station on the Ruhr river. The unit is used to maintain
grid stability. Above and beyond that, we are exploring how
to bridge extended periods of oversupply and shortages of
electricity. A promising option is the use of excess wind and
solar power to generate heat. The saved fuel (e. g. gas)
would then be available to produce electricity during later
periods of scarcity. We are also looking into recyclable
batteries that can be used to cover brief periods of extreme
shortage.

The economic and political environment is also challenging
for our gas and hard coal-fired power stations, which usually
cover medium and peak loads. The rapid expansion of
renewable energy in Germany has resulted in a significant
decline in the use of these assets compared to the beginning
of the decade. In some cases, their margins are far below the
levels common at that time. We have temporarily taken some
German and Dutch gas-fired power plants offline that can no
longer cover their fixed operating costs. The stations have
been mothballed and can come back online as soon as
market conditions allow. Furthermore, we have shut down
several hard coal-fired power stations. The most recent
examples are the Voerde A/B units on the Lower Rhine,
which were taken offline as of 1 April 2017. RWE held a
25 % stake in them and marketed their electricity. Besides
temporary and permanent power plant closures, we have
taken additional measures to cut costs and will also do so in
the future. Within the scope of our ongoing efficiency-
enhancement programme, we aim to reduce costs in the
European Power segment by about €100 million by 2019
compared to the 2016 level. We have made good progress in
this respect.

Despite the persistent pressure from consolidation, we
believe the European Power segment has long-term growth
prospects. We expect that our stations will become more
profitable as secured generation capacity becomes tight. In
the long run, this should benefit gas-fired power stations in
particular. As their margins have already recovered somewhat,
we were able to bring some mothballed stations back online,
for example Unit G of the Gersteinwerk power station in
Werne (Westphalia). Due to the German nuclear phase-out
and the closure of additional coal-fired units, gas will
become an increasingly important energy source in the
coming years in order to secure electricity supply. Gas-fired
power stations emit less carbon dioxide than coal-fired
power plants and are therefore accepted more by the public
as a partner to renewable energy.

In terms of power plant capacity, gas is already our most
important fuel, and its share of our generation portfolio will
continue to rise. For example, we are planning to build a
combined-cycle gas turbine power plant with an installed
capacity of up to 2,500 MW and/or an open-cycle gas
turbine with a capacity of up to 300 MW at our site at
Tilbury in the UK. Our investment decision will depend in
part on whether we manage to secure the compensation
we need for the project in the UK capacity market auctions.
We have identified growth options consisting of acquiring
existing assets in Germany and the Benelux region, which to
date do not have capacity markets. Building new generation
capacity is usually unprofitable in these regions, unless the

22 RWE Annual Report 2017

(3) Energy Trading. This segment encompasses the
multi-faceted activities of RWE Supply & Trading, which acts as
the commercial centre for the RWE Group. Its core business,
energy trading, forms the economic link between the
elements of our value chain, the regional markets and the
various energy commodities. RWE Supply & Trading
concentrates on trading in electricity, natural gas, coal, oil,
CO2 certificates and biomass. It increasingly conducts
these activities outside of Europe, for example in New York,
Singapore and Mumbai. The company is also responsible
for sourcing the fuel needed to produce electricity and heat
and marketing the electricity generated by RWE power
plants. One objective is to limit price risks. On top of that,
the segment generates added value by the commercial
optimisation of our power plant dispatch. The resulting
earnings are reported under the Lignite & Nuclear and
European Power segments. RWE Supply & Trading also
markets its expertise to major European customers
outside of the RWE Group, offering services ranging from
traditional energy supply contracts and comprehensive
energy management solutions to complex risk management
concepts.

Another focal point of RWE Supply & Trading’s activities is
the gas business. We enter into long-term supply agreements
with producers, organise gas transportation by booking
pipelines and optimise the timing of our deliveries using
leased gas storage facilities. We also conclude transactions
involving liquefied natural gas (LNG). The objective is to tap
into synergies between the pipeline-bound gas business and
overseas LNG trading. RWE Supply & Trading intends to
establish itself as one of Europe’s leading gas intermediaries.
To this end, the company also looks at markets outside of
RWE’s core regions. The principle underlying this approach is,
the greater the size and diversification of the procurement
and supply portfolios, the greater the chances to
commercially optimise them.

RWE Supply & Trading also leverages its know-how to make
short to medium-term investments in energy assets or
energy companies, for which value-enhancing measures can
be taken in order to fetch high returns upon resale (referred
to as principal investments). At the end of 2017, RWE Supply &
Trading had a portfolio of nine investments in a variety of
activities, a large portion of which was in the USA. They
range from the coal mine operator Blackhawk Mining and
the developer of renewable energy projects Walden Green
Energy to the specialist for energy storage solutions Stem.
The attractiveness of principal investments was proven by
our investment in the Lynemouth hard coal-fired power
station in the north of England: we purchased the plant in
2012 and then established the basis for its conversion to

biomass firing using state subsidies. In early 2016, the
power station was sold on to an investor for a profit.

(4) innogy. Our subsidiary innogy is responsible for business
involving renewable energy, distribution networks and retail.
Its strategy is designed to spur structural change in the
energy sector.

• Renewables. innogy plans, builds and operates facilities
for the generation of electricity from renewable sources.
In terms of generation capacity, the company’s strongest
presence is currently in Germany and the United Kingdom,
followed by Spain, the Netherlands and Poland. In terms
of energy sources, the focus is on onshore and offshore
wind, as well as hydroelectric power. innogy further
expanded its generation capacity last year: milestones
were the inauguration of the Dutch wind farm Zuidwester
(90 MW) and the commissioning of the Nordsee One
offshore wind farm (332 MW) north of the Isle of Juist, in
which innogy holds a 13.5 % stake. Furthermore, our
subsidiary has set the stage for the continued expansion
of its wind power capacity by acquiring a project portfolio
with over 2 GW in the USA and securing a state subsidy
contract for the Triton Knoll offshore wind project in the
UK. Moreover, by acquiring Belectric Solar & Battery at the
beginning of 2017, innogy has become a global player in
the supply of ground-mounted solar farms and battery
storage units. Belectric built one of Germany’s largest
battery storage facilities in Chemnitz, which was officially
inaugurated in August 2017, and is currently constructing
Israel’s most powerful solar farm together with a local
partner. We report on some of the projects mentioned
here in detail on page 38 et seq.

• Grid & Infrastructure. Networks are the backbone of the
energy transition, and their operators can generally earn
stable returns. innogy manages electricity distribution
networks in Germany, Hungary, Poland and Slovakia.
Moreover, it is active in the gas distribution network
business in Germany, the Czech Republic and Croatia.
Conditions in its home market Germany pose the greatest
challenge: rising volumes of electricity feed-ins from
renewables, which are dependent on the weather and
time of day, and an increasing number of small, decentralised
generation facilities are making network operation an
increasingly complex technical feat, but at the same time,
are also opening up growth opportunities. In order to
ensure a reliable supply of electricity in this environment,
innogy must invest in maintaining and expanding network
infrastructure. The company is developing new control
technologies and testing them in field trials so that networks
can be used more effectively and flexibly. A trailblazing

Combined review of operations > Strategy and structure

project in relation to engineering and testing such
technologies is the ‘Designetz’ project that was launched
in 2017 and is the result of innogy joining forces with a
number of partners in order to work on a blueprint for the
energy network of the future (see page 27). A co-operative
venture with Deutsche Telekom also aims to develop new
business models relating to the grid: the two companies
want to use synergies through the joint expansion of the
energy and fibre-optic network in rural areas. Furthermore,
innogy took a 17.5 % interest in eluminocity, a startup
with headquarters in Munich and Denver, which specialises
in intelligent street lighting, smart city sensor technology
and high-quality charging stations for electric vehicles.

• Retail. At the end of last year, innogy supplied 15.9 million
customers with electricity and around 6.6 million with gas
in eleven European markets. Our subsidiary is one of the
largest suppliers of electricity and gas in Germany, the
Netherlands and the United Kingdom. It has a leading
position in at least one of these products in several other
European markets. In the long run, it intends to focus on
markets with attractive framework conditions, in which it
can rank among the three leading suppliers. These
requirements are not met in the United Kingdom. Against
this backdrop, innogy agreed with its competitor SSE to
merge its UK retail business with a large portion of the
retail activities of SSE to form an independent company
listed on the stock exchange (see page 38). Challenges
and opportunities also result from changes in customer
needs. Increasing numbers of households and businesses
want to use energy more efficiently and profit from the
opportunities of digitisation. Therefore, innogy does not
limit itself to the traditional supply of electricity and gas.
Instead, the company also develops innovative products
and services enabling its customers to use energy
intelligently while taking advantage of the newest
technologies. This also involves entering into partnerships.
One example is the long-term co-operation with the
leading consumer electronics manufacturer Medion
initiated in the middle of 2017 that consists of combining
innogy’s software platform with Medion’s smart home
products. E-mobility is another of innogy’s important
business fields. One of the activities in this area is building
charging infrastructure. This often involves our subsidiary
forging partnerships with private enterprises. For example,
the company agreed with Tank & Rast to set up and
operate over 100 fast charging stations at the company’s
motorway restaurants and service stations. The German
Ministry of Transportation and Digital Infrastructure
granted innogy about €3 million in subsidies for the
installation of over 1,000 new charging stations.

RWE AG’s management system. Ensuring sustainable
growth in shareholder value is at the heart of our business
policy. To manage the Group companies, RWE AG deploys a
groupwide planning and controlling system, which ensures
that resources are used efficiently, and provides timely,
detailed insight into the current and prospective development
of the company’s assets, financial position and net worth.
Based on the targets set by RWE’s Executive Board and our
expectations regarding the development of the business,
once a year we formulate our medium-term plan, in which we
forecast the development of key financial indicators. This
plan contains the budget figures for the next fiscal year and
planned figures for the following years. The Executive Board
submits the plan to the Supervisory Board, which reviews
and approves it. The Supervisory Board occasionally requests
adjustments to be made prior to giving its approval. During
the fiscal year, we produce internal forecasts linked to the
budget. The Executive Boards of RWE AG and the main
operating units meet regularly to analyse the interim and
annual financial statements and update the forecasts. In the
event that the updated forecast figures deviate significantly
from the budget figures, the underlying reasons are
analysed and countermeasures are taken if necessary. We
also immediately notify the capital market in the event that
published forecasts need to be modified.

Some of the key indicators we use in managing our operational
business and assessing the financial situation are adjusted
EBITDA, adjusted EBIT, adjusted net income and net debt.
Adjusted EBITDA is defined as earnings before interest,
taxes, depreciation and amortisation. In order to improve its
explanatory power in relation to the development of
ordinary activities, we remove non-operating or aperiodic
effects, which are shown in the non-operating result.
Capital gains or losses, temporary effects from the fair
valuation of derivatives, impairments and other material special
items are filtered out. Subtracting operating depreciation
and amortisation from adjusted EBITDA yields the adjusted
EBIT, the development of which has a significant influence on
the variable compensation of our employees. Adjusted net
income is another key operating indicator. We calculate this
by correcting net income for all major special items (including
the entire non-operating result) along with the related income
taxes. Since 2016, we have used this indicator as a factor
in determining the share-based payment of our senior
management.

We face particular challenges in relation to climate protection,
especially since high carbon dioxide emissions also involve
high business risks. By expanding its activities in renewables,
the RWE Group is making an important contribution to
electricity generation that is gentle on the environment.
Furthermore, our new-build power plant programme
completed in 2015 has established the basis to replace old,
emission-intensive assets with cutting-edge generation
capacity. The carbon dioxide emissions of our power stations
have dropped steadily in the last five years. We expect this
trend to continue, above all due to the decommissioning
of coal-fired power plants. Based on current planning, our
emissions in our core markets Germany, the United Kingdom
and the Benelux region will decrease by between 55 million
and 65 million metric tons of carbon dioxide by 2030 compared
to 2015 (141 million metric tons). These figures relate to our
current generation portfolio and are in line with long-term
European and national climate protection goals.

Further information on our strategy and our measures in
relation to CR can be found in our separate non-financial
report on the Group in accordance with Section 315b,
Paragraph 3 of the German Commercial Code, which will
be published as part of our CR Report and does not form
part of the combined review of operations. The CR Report is
entitled ’Our responsibility‘ and can be accessed on the
internet at www.rwe.com/cr-report.

24 RWE Annual Report 2017

We primarily use the internal rate of return as a yield indicator
for assessing investment projects. The Group’s financial
position is analysed using cash flows from operating activities,
amongst others. We also attach special importance to the
development of free cash flow, the definition of which we
changed in 2017. It is the result of deducting capital
expenditure from cash flows from operating activities and
adding to them proceeds from divestments and asset
disposals. Net debt is another indicator of RWE’s financial
strength. Essentially, it consists of net financial debt together
with provisions for pensions and similar obligations, for
nuclear waste management, for mining damage (e. g. the
recultivation of opencast mining sites) and for the dismantling
of wind farms. One half of the liabilities from hybrid bonds
is recognised in net debt.

In compliance with International Financial Reporting Standards,
we recognise innogy as a fully consolidated company in the
consolidated financial statements. In other words, the Group
figures include our subsidiary’s revenue, expenses, cash
flows, assets, debt, etc. However, this approach only reflects
innogy’s operating independence to a limited extent.
Therefore, for management purposes, we also use key figures
in which our subsidiary is subsumed as a pure financial
investment under ‘other financial assets’. Further details on
this can be found on page 60.

Sustainability – a standard we hold ourselves to. We can
only succeed over the long term if we ensure society’s
acceptance by embracing our corporate responsibility (CR).
In order to focus on the various aspects of this responsibility,
we maintain a dialogue with all our stakeholder groups,
such as shareholders, employees, customers, politicians,
associations and non-governmental organisations. Since
the reorganisation of the Group, RWE AG has defined its
main task as ensuring security of supply. We also give great
importance to environmental management and occupational
safety. We have already achieved very high standards in
these areas and we intend to maintain these. Other key
areas for us include ensuring compliance with the Code of
Conduct and the compliance regulations of RWE and
making sure that our suppliers adhere to internationally
recognised environmental and social standards.

Combined review of operations > Innovation

1.2 INNOVATION

Innovation is the key to long-term commercial success. This holds true more than ever for energy utilities like RWE.
In numerous research and development projects, we look for technical solutions to make opencast mines more
profitable, power plants less emissions-intensive, and grids more intelligent. We are also innovative with regard to
the development of new business models that satisfy customers’ future needs and expand our offering beyond
the sale of electricity and gas. In our daily operations, we benefit from the ingenuity and entrepreneurial spirit of
our employees. Once again they had thousands of good ideas in 2017, which will allow us to achieve millions of
euros in savings.

With around 490 inventions, we are in the vanguard
of Europe’s utilities. The RWE Group is innovative in many
ways. Our main motivation is to remain competitive over the
long term in a dramatically changing environment as well as
to be a driving force behind this transformation. With
a groupwide tally of around 1,480 patents and patent
registrations, based on roughly 490 inventions, we are in
the vanguard of Europe’s most innovative utilities. Last
year, we worked on more than 320 research and development
(R & D) projects and filed patent applications for 76 inventions.
Our R & D projects frequently involve co-operating with external
partners from the engineering and chemical industries, or
with research institutions. As a result of this, we usually only
have to bear a portion of the project costs. The RWE Group’s
operating R & D spending amounted to €182 million in 2017
(previous year: €165 million). A total of about 550 of our
employees were solely or partially dedicated to R & D activities.

RWE AG: solutions for more economic opencast mining,
lower emissions and new ways of using carbon dioxide.
The reorganisation of the RWE Group changed the
responsibilities for research and development: innovation in
the areas of renewable energy, grids and retail is now in the
hands of our subsidiary innogy. RWE AG is responsible for
the R & D activities of the areas of the Group under its
management. Its measures are primarily dedicated to
conventional electricity generation. They aim to make the
operation of our opencast mines and power stations more
profitable and reduce emissions. Another major area of
research is the use of lignite and carbon dioxide through
conversion to fuel or starting materials for the chemical
industry. We will present a small selection of RWE AG’s
important R & D projects, followed by a brief insight into
the innovative work done by innogy and ending with an
employee’s idea, which is representative of many others.

Opencast mining: more efficient processes thanks to digital
control. In the Hambach opencast mine, we explored the
options offered by digitisation to make lignite production
more profitable. This was done in a four-year EU research
project in which we co-operated with Delft University of
Technology (Netherlands). Controlling opencast mines
digitally is as complex as mining the lignite itself as it also
involves many steps that dovetail each other: huge bucket-
wheel excavators in the terraced opencast mines scoop up
the coal and its covering layers and place it on conveyor
belts on which it is transported to a distributor. This is where
the loads are sent off on various transport routes: the lignite
is either placed in interim storage in a coal bunker or supplied
directly to the surrounding power stations and processing
plants – either via belt conveyor systems or the works railway,
depending on the distance. The overburden often travels
several kilometres on conveyor belts before it reaches the
spent side of the mine where it is used to refill the pits
resulting from mining. To ensure that this process runs with
clockwork precision, the heavy equipment and material
flows must be dispatched accurately. Numerous influences
and effects must be considered when making every single
decision. Our research project has demonstrated how this
can be done with digital support. It was completed successfully
in October 2017. Now RWE is working on turning the methods
designed within the scope of the project into dispatch aids
applicable to the operation of opencast mines. Our goal is to
have a software module by 2020 with which our mining
engineers can optimise processes in opencast mines working
either on their office computers or using tablets on site.

For the reliable operation of power stations: coal analysis
‘on the fly’. Operating lignite-fired power plants as smoothly
as possible requires us to have precise knowledge of the
composition of the coal that we use. Not all coal is the same,
as it can contain various degrees of trace elements such as
iron, calcium and magnesium. Unfavourable mixtures of these
can leave deposits in the furnace during combustion, forcing
the lignite unit to be shut down temporarily for cleaning. To
prevent this, we analyse the composition of the coal before
it reaches the power plant. This involves regularly taking
samples from the conveyor belt, preparing and analysing

26 RWE Annual Report 2017

them – a process that is fully automated. We are currently
testing a new device in the Fortuna coal bunker of the
Garz weiler opencast mine based on an alternative method:
Germany’s first online coal analyser featuring innovative
radio metric measuring technology. The apparatus analyses
the quality of the coal in real time, i. e. as it passes the
analyser on the conveyor belt – up to 10,000 metric tons per
hour. If the new online coal analyser proves itself in continuous
operation, it may be used in our opencast lignite mines. We
expect this to reduce maintenance costs while improving
the availability of our power plants.

Reducing emissions: flue gas with less mercury thanks to
rotary hearth furnace coke. We aim to operate all of our
power stations in the most environmentally friendly manner.
The legislator already imposes strict requirements on us
in this regard, for example in relation to mercury emissions.
The introduction of new EU-wide limits makes the framework
conditions for operating our lignite-fired power plants even
tighter. Today, we already manage to remove and capture
most of the mercury from flue gases. As a result, our stations
are far below the currently applicable threshold values.
Independently of that, for years we have been conducting
in-depth research into ways to further decrease mercury
emissions on a large scale and at reasonable cost. We are
focusing primarily on a method using rotary hearth furnace
coke from Rhenish lignite produced by RWE. We already use
this substance as a mercury separator, albeit only in our
processing plants, in which we convert lignite into briquettes
or powdered lignite for the cement and lime industry. Now
we are testing whether and how rotary hearth furnace coke
can be used to lower the emissions of power stations.
We are doing this with the help of a pilot plant in the Coal
Innovation Centre at the Niederaussem power station, which
has been running since October 2017. This involves very finely
ground rotary hearth furnace coke being mixed with water
and introduced into the power plant’s flue gas ducts, which
are much larger than those of the processing facilities. We
will make use of the findings to design a demonstration
plant for permanent operation, which we will start building
at Niederaussem in 2018.

New uses for carbon dioxide: from CO2 to diesel. We have
been working on a method for removing carbon dioxide
from flue gases in power stations for a long time. We have
developed one of the world’s leading technologies in
this field in co-operation with BASF and Linde in the Coal
Innovation Centre at Niederaussem. It was tested in a pilot
plant that has put in more than 60,000 operating hours since
2009 and has proven its efficiency, delivering carbon dioxide
separation rates of over 90 %. Within the scope of three EU
subsidy projects, we are now going one step further: we
plan to use the carbon dioxide from the pilot plant, water
and electricity to produce fuel and starting materials for the
chemical industry in various test facilities at the Niederaussem
site. In every production method, the carbon dioxide is used
to create a replacement for fossil fuels such as oil and gas.
The projects are called OCEAN, LOTER.CO2M and ALIGN-CCUS
and differ from one another mainly by virtue of their target
products. In OCEAN, oxalic acid, a basis for high-quality
chemical products, is obtained from carbon dioxide. In
LOTER.CO2M, the focus lies on the simple and efficient
production of methanol, a starting material for a variety of
chemical products and one of the most produced chemicals
worldwide. Last but not least, the ALIGN-CCUS project is
dedicated to the production of dimethyl ether (DME), which
is of interest particularly as a replacement for diesel. It burns
nearly soot-free and does not produce much nitrous oxide.
DME can be used in vehicle engines and power units. The
latter can be used to cover peak loads during low levels of
electricity feed-ins from renewable energy (e. g. in the event
of lulls). Furthermore, DME can be used to chemically
store excess electricity over extended periods of time
while taking up little space. We have set ourselves the goal
for 2020 of running a power unit’s diesel engine on DME
produced by our test plant. The unit will initially be
configured to generate 240 kW and be as large as a freight
container. However, it is modular and therefore expandable.
It can be used to supply electricity decentrally, for instance
to bridge periods until networks are expanded. In the projects
described above, we work with a variety of renowned industrial
and scientific partners, including RWTH Aachen, the
Universities of Duisburg-Essen and Genoa, Mitsubishi Hitachi
Power Systems Europe, the independent engineering service
provider for internal combustion engines and vehicle
technology FEV, and the Jülich Research Centre. The projects
receive approximately €3 million in EU subsidies and are
scheduled to run for a maximum of four years.

More detailed information on this and RWE AG’s other
R & D projects can be found at www.rwe.com/innovation.

Combined review of operations > Innovation

Savings thanks to the experience and knowledge of our
employees. Day-to-day operations are a fertile breeding
ground for good ideas. Many of our employees harness their
experience to help move the company forward with
innovation. Last year, Group employees submitted around
2,300 suggestions for improvements to the idea managers
at their respective companies. We estimate the economic
benefit of their suggestions amounts to about €8 million
in the first year of implementation. For example, an employee
of RWE Power discovered that bulldozer performance in the
Garzweiler opencast mine can be increased by making small
adjustments to the blade. The bulldozer uses the blade to
push material in order to level paths for heavy equipment,
among other things. The employee realised that loose and
muddy material often failed to stick to the front of the blade,
falling off to the sides instead. The employee’s idea was to
fit big ‘ears’ made of thick-walled sheet metal to the sides
of the blade in order to do a better job of keeping the
bulldozed material in front of it. This put the ball in the court
of RWE Power’s Equipment Department, which upgraded
one of our vehicles to these specifications. A test with the
modified blade demonstrated that a third more material
could be moved. The first step will involve upgrading four of
the bulldozers used in the Garzweiler opencast mine. We
estimate that associated costs will total just under €11,000
– money well spent, as this can result in over €80,000 in
annual savings based on approximately 5,000 hours of
bulldozing work carried out every year.

innogy SE: focus on renewable energy, smart grids and
new retail products. The RWE Group is also pushing forward
with innovation in renewables, distribution networks and
supply. Our subsidiary innogy has a wide range of innovative
undertakings which are presented in detail at www.innogy.com/
innovation. Some of them enable it to make valuable
contributions to the success of the energy transition, e. g.
the ‘Designetz’ project. Spearheaded by innogy, a research
consortium aims to develop a sustainable concept for
integrating renewable energy into the supply system. The
main challenge consists of finding a way to network the
large number of decentralised electricity generators and users
in both rural and urban areas intelligently. The consortium
partners include municipal utilities, renowned research institutes
and large technology firms. Designetz is scheduled to be
rolled out in North Rhine-Westphalia, Rhineland-Palatinate
and Saarland. These states, in which over a quarter of
Germany’s population lives, are ideally suited to conducting
field trials for the decentralised energy landscape of the
future, as they are home to areas with very high levels of
electricity from renewables as well as heavily industrialised
areas of consumption. Designetz is part of the ‘Intelligent
Energy Showcase – Digital Agenda for the Energy Transition’
(SINTEG) subsidy programme of the German Federal Ministry
for Economic Affairs and Energy. The Ministry attaches such
high importance to Designetz that it has provided it with about
€30 million in subsidies.

Innovation Hub at innogy: a platform for the development
of new business models. Companies seeking to survive over
the long term in a market undergoing dynamic change must
ensure today that they have compelling offers to satisfy the
customer needs of the future. At the Innovation Hub, a
platform created in 2014, trailblazing ideas and business
models concerning all things energy and beyond are
developed. Special attention is paid to the possibilities offered
by digitisation. The ambition is to bring products and
services to market maturity which allow customers to use
energy more efficiently and improve their quality of life. An
example of this is ‘Fresh Energy’, a new solution consisting
of a smart meter and a smartphone app. The smart meter
records the energy consumption of all household appliances.
The data is presented in a manner that is easy to understand,
enabling the user to identify ‘power hungry’ appliances.
Moreover, customers are only invoiced for the electricity
they have actually used, without any advance or back payments.

28 RWE Annual Report 2017

1.3 ECONOMIC ENVIRONMENT

The market prospects of our power stations improved somewhat in 2017. Buoyed by rising hard coal quotations,
wholesale electricity prices continued the course for recovery on which they embarked at the beginning of 2016.
Purchases of base-load power made in 2017 for the following calendar year cost an average of €32 per MWh, €5 more
than in 2016. However, this will only affect our earnings in the future. We had sold forward most of our electricity
generation for 2017 in earlier years. The realised margins were significantly down on 2016. However, the profit margins
of our Continental European gas-fired power stations improved.

Economic upturn continues. Based on initial estimates,
worldwide economic output was some 3 % higher last year
than in 2016. The Eurozone is estimated to have recorded
more than 2 % growth. Germany’s gross domestic product
(GDP) is likely to have risen by about the same percentage.
Stimulus came primarily from consumer spending. GDP in
the Netherlands rose by approximately 3 %. By contrast,
Belgium posted growth of just under 2 %. The same applies
to the United Kingdom, our most important market outside
of the currency union, which benefited from the expanding
service sector, but felt the adverse effects of the impending
exit from the EU. The economies of our major Central Eastern
European markets displayed much more dynamic development.
Available data indicates that GDP increased by over 4 % in
Poland and the Czech Republic, with Hungary and Slovakia
recording a gain of more than 3 %.

Temperatures slightly above average. Whereas the economic
trend significantly affects the energy needs of industrial
enterprises, residential energy consumption is influenced
more by weather conditions. The lower the outside temperature,
the more gas and electricity is needed for heating purposes.
Meteorological data for 2017 shows that weather conditions
were relatively mild throughout the whole of Europe. Average
temperatures were mostly slightly higher than the relevant
ten-year average, despite the very cold weather in January.
The comparison to the previous year is varied: overall, it was
slightly warmer than in 2016 in the United Kingdom and the
Netherlands, whereas it was colder in large parts of Eastern
Europe. The average temperature for the year measured in
Germany was on a par with the previous year.

Wind conditions more favourable than in 2016. In addition to
energy consumption, the generation of electricity – particularly
from wind farms – is also subject to weather-related influences.
On the whole, wind levels at innogy’s generation sites were
slightly less favourable than the long-term average. However,
they improved over the prior year in nearly all countries, with
the exception of Spain. Run-of-river power stations are also
subject to weather conditions. Their electricity production
depends on precipitation and melt water volumes. In Germany,
where most of the RWE Group’s hydroelectric power plants
are located, these volumes were relatively low in 2017, when
compared to the long-term average and the preceding year.

Higher energy consumption in RWE’s core markets. The
economic growth stimulated energy consumption in our core
markets, whereas the trend towards saving energy had a
dampening effect. Based on preliminary calculations by the
Federal Association of the German Energy and Water Industries
(BDEW), German demand for electricity in 2017 was 0.7 %
up year on year. Estimates indicate a rise of about 1 % in the
Netherlands. Electricity consumption is likely to have advanced
by between 2 % and 3 % in Poland, Slovakia and Hungary,
whereas it dropped by some 2 % in the United Kingdom.

In relation to gas, volume increases in our Continental European
markets were contrasted by a decline in the United Kingdom.
Based on pro-forma BDEW figures, gas consumption rose
by 6 % year on year in Germany, in part because the market
conditions for gas-fired power plants improved, allowing
these stations to be used more. According to estimates, gas
consumption was up 2 % in the Netherlands, and 1 % in the
Czech Republic. By contrast, gas demand in the United
Kingdom decreased by approximately 2 % compared to 2016,
in part due to the relatively mild weather.

Combined review of operations > Economic environment

One-year forward prices of gas on the TTF wholesale market
€/MWh (average weekly figures)

2016 forward

2017 forward

2018 forward

2015

2016

2017

Source: RWE Supply & Trading.

Stabilisation of TTF wholesale gas quotations. Following a
lengthy decline, wholesale gas prices recovered somewhat in
Western Europe. Averaged for the year, spot prices at the
important Dutch Title Transfer Facility (TTF) amounted to €17
per MWh, €3 more than in 2016. In TTF forward trading,
contracts for delivery in the following calendar year (2018
forward) were also settled for an average of €17 per MWh.
By comparison, in 2016 the price paid for the 2017 forward
was €15.

Residential tariffs typically react to developments on the
wholesale market with a time lag. They were still significantly
marked by the slump of earlier years. Based on available
data, gas became 3 % and 1 % cheaper for German and UK
households, respectively. In the Czech Republic, residential
customer tariffs were essentially unchanged, whereas they
were up 2 % year on year in the Netherlands. Developments
affecting industrial customers were as follows: prices were
up 1 % in Germany, 5 % in the Netherlands and 6 % in the
United Kingdom. This was contrasted by a 7 % decline in tariffs
in the Czech Republic.

One-year forward prices of coal deliveries to Amsterdam/Rotterdam/Antwerp
US$/metric ton of coal (average weekly figures)

2016 forward

2017 forward

2018 forward

2015

2016

2017

Source: RWE Supply & Trading.

30 RWE Annual Report 2017

Hard coal much more expensive than in 2016. Quotations
in international hard coal trading bottomed out at the
beginning of 2016, after which they rose considerably. In
2017, coal imports including freight and insurance via the
ARA ports (Amsterdam/Rotterdam/Antwerp) were quoted at
an average of US$84 (€75) per metric ton in spot trading, up
US$24 compared to 2016. The 2018 forward (API 2 Index)
traded at US$74 (€65) per metric ton, US$20 higher than
the comparable figure for the previous year. This is in part due
to robust Chinese economic activity and its revitalising
impact on the country’s demand for coal. In 2016, Beijing

had curbed domestic coal production through regulatory
intervention. However, the restrictions were loosened after
a while. Freight rates, i. e. overseas shipping costs, are an
important price component in international hard coal trading.
They also displayed a clear upward trend. In 2017, the standard
route from South Africa to Rotterdam cost an average of just
under US$7 per metric ton, compared to slightly more than
US$4 in the previous year. The rise in fuel costs had a price-
increasing effect. Furthermore, excess ocean freight capacity
built up in the past decreased somewhat.

Forward prices of CO2 emission allowances (EU Allowances)
€/metric ton of CO2 (average weekly figures)

December 2016 forward

December 2017 forward

December 2018 forward

2015

2016

2017

Source: RWE Supply & Trading.

Reform of European Emissions Trading System (ETS) gives
rise to speculation over CO2 certificates. Prices in European
trading of carbon dioxide emission allowances also increased.
Last year, a European Union Allowance (EUA), which confers
the right to emit a metric ton of CO2, was quoted at an average
of €6. This information relates to forward contracts which
fall due in December 2018. By comparison, in 2016, an EUA
in contracts for December 2017 cost slightly more than €5.
There are still many more emission allowances on the market
than companies need to cover their carbon dioxide emissions,
but the EU Parliament and the European Council have
initiated a package of measures that puts the EU in a position
to reduce the surplus of certificates substantially (see page 34).

In the last rounds of negotiation on this package in the second
half of 2017, EUAs rose in price considerably, reaching the
€8 mark at the end of the year. However, the measures
adopted by the EU will not come to bear until after 2018.
Furthermore, Brexit brings with it risks: it is still unclear if
and when the United Kingdom will leave the ETS. In the
event of an early withdrawal, industrial enterprises with a
local domicile will put large numbers of emission allowances
they no longer require on the market, thereby increasing the
oversupply. The possibility of such a scenario had a dampening
effect on EUA prices in 2017.

Combined review of operations > Economic environment

One-year forward prices of base-load electricity on the wholesale market
€/MWh (average weekly figures)

2016 forward

2017 forward

2018 forward

2015

2016

2017

Germany

Netherlands

United Kingdom

Source: RWE Supply & Trading.

Wholesale electricity prices markedly up year on year. In
our major generation markets, wholesale electricity prices
continued the upward trend on which they had embarked
in 2016. The recovery of hard coal quotations played an
important role. Hard coal-fired power plants set the prices
on the electricity market for many hours during the year,
especially in Germany. If their fuel costs rise, this has a
knock-on effect on electricity prices. In Germany, the average
spot price of base-load power was €34 per MWh in 2017,
€5 more than in the previous year. Prices also rose in forward
trading. Last year, the 2018 base-load forward cost an
average of €32 per MWh. By comparison, the 2017 forward
traded for €27 per MWh in 2016.

In the United Kingdom, our second-largest generation market,
wholesale electricity quotations are typically much higher
than in Germany. The average spot price of base-load electricity
amounted to £45 (€52) per MWh, up £5 on the level witnessed
in 2016. The 2018 forward traded for £44 (€50) per MWh,
£3 higher than the previous year’s comparable figure.

In the Netherlands, where we have our third-largest generation
position, base-load power traded for an average of €39 per
MWh on the spot market. Relative to 2016, it rose in price
by €7. Forward contracts for 2018 were quoted at €36 per
MWh, €5 more than what was paid for the 2017 forward in
the prior-year period.

32 RWE Annual Report 2017

Clean dark spreads¹ forward trading
€/MWh (average weekly figures)

2016 forward

2017 forward

2018 forward

-5

2015

2016

2017

Germany

Netherlands

United Kingdom

Source: RWE Supply & Trading.

1 Price of base-load electricity minus the cost of hard coal and CO2 emission allowances based on a power plant efficiency of 35 % to 37 %; including CO2 tax in the UK.

Clean spark spreads¹ forward trading
€/MWh (average weekly figures)

– 5

– 10

– 15

– 20

2016 forward

2017 forward

2018 forward

2015

2016

2017

Germany

Netherlands

United Kingdom

Source: RWE Supply & Trading.

1 Price of base-load electricity minus the cost of gas and CO2 emission allowances based on a power plant efficiency of 49 % to 50 %; including CO2 tax in the UK.

Sustained pressure on electricity generation margins. The
margins of our conventional power plants are the difference
between the price of electricity and the costs (including
taxes) of the fuel and CO2 emission allowances required to
produce it. We generally source the fuel for our hard coal
and gas-fired power plants from liquid markets at prevailing
conditions. Therefore, the generation costs of these stations
can change significantly. The margins are referred to as clean
dark spreads for hard coal-fired power plants and clean spark
spreads for gas-fired power plants.

The two above graphs illustrate the development of the
aforementioned spreads in our main generation markets
since 2015, based on the respective year-forward transactions.
Taking the annual average figures as a basis, clean dark
spreads were clearly on a downward trend over the entire
three-year reporting period presented, particularly in the
United Kingdom. Margins of gas-fired power stations
displayed much more favourable development, picking up
continually in both Germany and the Netherlands. In the
United Kingdom, clean spark spreads were the highest in
absolute terms, but in 2017 failed to match the very good
level recorded the year before.

Combined review of operations > Economic environment

Significant increase in German industrial electricity prices.
Electricity bills are greatly determined by grid fees, levies
and taxes. This applies above all to households. In Germany
and the United Kingdom, where the share of the total price
accounted for by state-mandated components is growing
steadily, residential tariffs rose by an average of 2 % and 7 %
compared to 2016. In the Netherlands and Poland, households
had to pay about 1 % and 3 % more than in the previous
year. By contrast, residential tariffs declined by 3 % and 4 %
in Hungary and Slovakia. The regional differences in the
development of industrial electricity prices were even greater:
they increased by 8 % in Germany and 3 % in the United
Kingdom, whereas they dropped by 1 % in the Netherlands, 7 %
in Poland, 8 % in Hungary and by as much as 11 % in Slovakia.

The cost of the fuel used to generate electricity from nuclear
energy and lignite is generally more stable. We produce
lignite from our own opencast mines. There are no reliable
market prices for it due to its limited tradability. We cover
our uranium consumption via long-term contracts at firm
conditions. Owing to their relatively stable fuel costs, the
margins of lignite-fired and nuclear power plants generally
develop in line with wholesale electricity prices and they have
mirrored the significant upward trend of the latter since 2016.

RWE electricity from lignite and nuclear energy sold for
an average of €31 per MWh. We sell forward most of the
output of our power stations and secure the prices of the
required fuel and emission allowances in order to reduce
short-term volume and price risks. Therefore, the income we
earned from our power plants in the year under review
depended on these types of forward contracts for 2017,
which we had concluded up to three years in advance.
Overall, our 2017 power production sold for a lower price
compared to the previous year. For electricity from our
German lignite-fired and nuclear power plants, we achieved
an average of €31 per MWh (previous year: €35 per MWh).
As a result, income from these stations was significantly
lower than in 2016. The effects of the abolishment of the
German nuclear fuel tax have not been considered here. Our
hard coal-fired stations also recorded declining margins.
Conversely, our gas-fired power plants, the production of
which we sell forward closer to delivery, already benefited
from the most recent recovery of wholesale electricity prices.
In sum, their margins and deployment times were higher
than in the previous year.

34 RWE Annual Report 2017

1.4 POLITICAL ENVIRONMENT

In 2017, policymakers made trailblazing decisions regarding the energy sector. One of the most important ones
related to the European Emissions Trading System: following a lengthy tug of war, the European Parliament and the
Council of Ministers reached an agreement on a reform to strengthen this climate protection tool. The most important
course set in Germany related to nuclear energy: it was established by law that the government will take over the
processing and financing of the interim and final storage of radioactive waste. It will receive the capital required for
this from a fund, into which the power plant operators made payments in the middle of 2017. This regulation is
appropriate. As a result, our political risks in relation to nuclear energy decreased considerably.

European emissions trading reform adopted. In February
2018, the European Parliament gave the go-ahead for a
fundamental reform of the European Emissions Trading System
(ETS). The European Council had already given its informal
approval in December 2017. This was preceded by trilateral
talks held by representatives of the two bodies and the EU
Commission, which led to an agreement in November. The
objective of the reform is to strengthen the ETS and bring it
in line with the European greenhouse gas reduction goal for
2030. By then, branches of industry participating in the
ETS must reduce their emissions by 43 % compared to 2005.
Therefore, the number of CO2 certificates issued will be
lowered by 2.2 % annually during the fourth trading period,
which runs from 2021 until 2030. The current reduction rate
is 1.74 %. Another objective of the amendment to the ETS is
to reduce the existing glut of allowances on the market
more quickly. This will be done by transferring a much larger
volume of allowances into the ‘market stability reserve’
(MSR) compared to what is prescribed by current legislation.
The MSR, which will be used from 2019 onwards, is a tool
that will give the EU more flexibility in bringing the supply of
certificates in line with demand. The new regulation envisages
withholding up to 24 % of the volume allocated on the market
annually from 2019 to 2023 and transferring it to the MSR.
It also envisages cancelling MSR emission allowances exceeding
the volume allocated to the market in the preceding year
from 2023 onwards. In addition, it will allow member states
to cancel certificates relating to power plants closed as a
result of emission-reduction measures.

EU imposes stricter limits on air pollutant emissions. The
European Union has passed new regulations for limiting air
pollutant emissions of new power plants, which must also be
complied with by existing stations from 2021 onwards. A
corresponding implementing regulation entered into force in
August 2017. By and large, the standards are appropriate
and feasible. However, they go beyond what is achievable
at present in relation to nitrous oxides and mercury. The
implementing regulation must now be translated into national
law, which in Germany will involve an amendment to the

thirteenth Federal Emission Control Act. The EU has given
member states room for manoeuvre within which they can
set their own thresholds. We hope that German policymakers
will consider technical and economic feasibility as well as the
need for a secure supply of electricity. Only once the
Federal Emission Control Act has been amended can we
estimate the consequences that this will have for our power
plants. The need to implement extensive retrofits or to shut
down individual stations early cannot be ruled out.

European Council wants to exclude coal-fired power stations
from capacity markets. In the middle of December 2017,
the member states in the European Council agreed on a joint
position on the redesign of energy law. One of the main
topics was the determination of minimum standards that
national governments must observe if they have introduced
capacity mechanisms or intend to do so. The countries agreed
that power plants emitting more than 550 grams of carbon
dioxide per kilowatt hour may only be compensated for their
capacity if their annual emissions do not exceed 700 kilograms
per kilowatt of installed capacity. This rule should apply
to new and existing plant from 2026 and 2030 onwards,
respectively. There are no provisions governing the level
of the payments until then – with the exception that
compensation for existing stations, which do not meet the
550 gram criterion, must be reduced by 5 % per year from
2026 to 2030. If the concepts of the European Council are
implemented in the planned EU Electricity Market Regulation,
coal-fired power stations and old gas-fired power plants
would not be able to participate in capacity markets. A modern
lignite-fired power plant would be allowed to operate for a
maximum of 750 hours per year in order to remain within
the annual emission contingent of 700 kg/kW. This would
only represent about 10 % of its normal capacity utilisation.
The service life of a modern hard coal-fired power station
would be limited to roughly 950 hours per annum. If Germany
introduced a capacity market, a large portion of the country’s
secured generation capacity would be excluded from it. Very
little would be gained in terms of security of supply.

Combined review of operations > Political environment

At the end of February 2018, the Industry Committee of the
European Parliament debated the matter and established its
standpoint. The Committee’s position is generally in line with
the concept of the Council. It is actually a proponent of even
tighter regulation in certain areas. Now the Parliament and
Council have to agree on a joint position. This will involve
trilateral negotiations with representatives of the
Commission, which will probably carry on into the second
half of 2018.

New law on nuclear waste disposal in force – utilities pay
into the nuclear energy fund. The law on the reorganisation
of the responsibility for nuclear waste disposal in Germany
entered into force on 16 June 2017. This was half a year
after being passed by the Lower House of Parliament, as it
was subject to EU clearance. The law is largely in line
with the recommendations submitted in April 2016 by the
Commission for the Review of the Financing of the Nuclear
Phase-out tasked by the German government. Accordingly,
the federal government will handle the processing and
financing of the interim and final storage of radioactive waste,
whereas responsibility for shutting down and dismantling
the stations as well as for packaging radioactive waste will
continue to be borne by the companies. The tasks transferred
to the federal government will be financed by a fund into
which power plant operators have paid. On 3 July 2017, the
companies transferred the full amount of €24.1 billion to the
fund’s accounts at the Deutsche Bundesbank. RWE’s share
amounted to €6.8 billion. This ends the liability of nuclear
power plant operators for the costs of intermediate and final
storage. In order to provide a legal basis for this, on 26 June
the companies involved concluded a public law contract with
the Federal Republic of Germany. This contract provides the
companies with a higher level of legal certainty related to
the release from liability and also establishes details on the
conditions of transferring radioactive waste to the Federal
authorities. Based on this contract, numerous legal disputes
between the utilities and the state over nuclear energy
related issues were terminated, and the companies involved
withdrew their claims.

Germany reforms grid fee structure. The German Act on
the Modernisation of the Grid Fee Structure (NEMoG) entered
into force on 22 July 2017. The new legislation introduced
through NEMoG governs the gradual uniformity of transmission
system fees. This measure was triggered by the fact that the
four German transmission system operators mainly pass their
network operation, maintenance and expansion costs through
to the grid users in their respective balancing zones. Therefore,

there are significant regional differences among transmission
grid fees, which account for approximately a quarter of grid
costs. Now the fees will be aligned in annual increments
from 2019 to 2023. The details of the implementation will
be set out in a regulation. As a result of NEMoG, grid fees
will tend to rise in western and southern Germany and fall in
the north and east. Energy-intensive industries in the balancing
zone of Amprion, which is situated in North Rhine-Westphalia,
Rhineland-Palatinate and Saarland as well as parts of Lower
Saxony and Bavaria, are among the losers of the reform:
they will have additional costs, which will be significant in
some cases.

The second key part of NEMoG is the partial abolition of
the compensation received by operators of decentralised
generation units for ‘avoided grid fees’. So far, the justification
for the payments has been that the higher network levels
experience relief when electricity is fed into the local
distribution system and also used locally and that this could
reduce the cost of expanding the supra-regional network,
amongst other things. However, the German government
points out that the expansion of renewable energy increasingly
leads to a local oversupply of decentrally generated electricity,
which results in feed-ins back into the higher-voltage network.
As regards the reduction in compensation for avoided
grid fees, NEMoG distinguishes between units with volatile
generation volumes (e. g. wind farms) and those with
controllable production (e. g. combined heat and power
stations). Concerning the former generation units, the law
envisages new plant no longer receiving compensation from
2018 onwards and fees for existing stations being gradually
reduced. The following applies to units with controllable
generation: new plant will no longer be subsidised from
2023 onwards, whereas old stations will continue to receive
compensation. However, NEMoG also introduces limitations
for the latter type of plant: the law stipulates that the basis
for calculating avoided grid fees (which is derived from the
grid costs) will be frozen at the 2016 level from 2018 onwards.
It also envisages no longer taking into account certain grid
costs in the future. Some RWE power stations are affected
by these two adjustments. By contrast, operators of generation
units that are covered by the German Renewable Energy Act
(EEG) are not disadvantaged by the reform, as income from
avoided grid fees results in a commensurate reduction in
compensation under the EEG.

ramifications of the coalition agreement for the energy
sector, as a lot depends on the details of the climate protection
package. To this end, the government intends to enter into
a broad-based dialogue involving all affected companies.
The measures will then be written into a new national climate
and energy agreement by the end of 2018.

Incremental capping of energy prices for UK households.
In the United Kingdom, policymakers have begun to cap
energy prices for certain customer groups. The first of this
type of measure entered into force in April 2017. It applies
to households with prepayment meters and is limited to
three years. In February 2018, this scheme was expanded to
standard-tariff customers that receive a price reduction as
low-income households, known as the ‘warm home discount’.
This regulation has a limited term and will be abolished by
no later than the end of 2019.

The government envisages all customers with standard-rate
tariffs benefiting from a price cap in the future. In October
2017, the Department for Business, Energy and Industrial
Strategy presented a corresponding bill to the UK Parliament
for review. It stipulates that the planned price cap will expire
at the end of 2020. However, policymakers reserve the right
to prolong it for up to three years. The review of the bill was
completed in February 2018. A revised bill is expected to be
submitted to Parliament in the spring, with the legislative
and approval steps scheduled to be taken by the end of
2018. Although there is no certainty on the details of the
general price capping, it will probably have negative effects
on the earnings of utilities.

36 RWE Annual Report 2017

German Network Agency decides to introduce new general
productivity target for gas network operators. At the end
of last year, the German Network Agency, which is the federal
network regulator, determined the minimum efficiency
improvements that it expects of gas network operators from
2018 onwards. Accordingly, companies must increase
productivity by 0.49 % above the general rate. In addition,
network operators which have been found to have inefficiencies
on the basis of cost audits will be obliged to achieve additional
increases. The aforementioned rate of increase is preliminary.
This indicator – usually referred to as the ‘general sectoral
productivity factor’ – is one of the key levers in the concept
of German incentive-based regulation for network operators.
Within the scope of this concept, the regulatory authorities
establish revenue caps for each five-year regulatory period.
These caps are adjusted on an annual basis – depending on
the productivity increases demanded of companies, among
other things. The third regulation period for gas began at
the start of 2018, and for electricity it will begin a year later.
The federal and state governments had set the general
sectoral productivity factor at 1.25 % and 1.5 % per year for
the first two regulatory periods. This determination has
now been made by the Network Agency for the first time.
The Federal Association of the German Energy and Water
Industries (BDEW) and the network operators are of the
opinion that the earlier rates were too high. The BDEW
believes that they should be reduced to zero, as it feels that
anything above this level implies that the network operators’
progress in terms of productivity is above average or that
increases in wages and the cost of materials and capital
employed in the grid business are below those of the
economy in general.

New Dutch government aims for exit from coal by 2030.
In mid-October 2017, after more than 200 days of negotiations,
the new Dutch government concluded its coalition agreement.
It reflects the intent of the four coalition parties, under the
leadership of Prime Minister Mark Rutte, to take ambitious
steps to reduce greenhouse gas emissions. One objective is
for the country to stop generating electricity from coal
completely by 2030. Five hard coal-fired power stations are
currently in operation in the Netherlands, including two
owned by RWE. Furthermore, the new government intends
to introduce a national carbon price floor, making CO2
emissions in the electricity sector more expensive. The goal
behind these and further measures is to lower the country’s
greenhouse gas emissions by 49 % by 2030 compared to the
1990 level. In spite of this, the government is putting a
stop to the subsidisation of biomass co-firing: it intends to
discontinue this completely from 2024 onwards. However,
subsidies already pledged to RWE will probably not be
affected by this. At present, it is impossible to predict the

Combined review of operations > Major events

1.5 MAJOR EVENTS

A number of pleasing events occurred for RWE last year. One was that the constitutional judges in Karlsruhe declared
the German nuclear fuel tax null and void, resulting in the federal government refunding us the €1.7 billion in taxes
we had paid in earlier years. We want to pay part of this sum to our shareholders as a special dividend in early May
2018. There was also some good news from innogy: our subsidiary paved the way for the continued expansion of its
wind portfolio and positioned itself as an international supplier of solar farms and battery storage units by acquiring
Belectric Solar & Battery. Furthermore, innogy came up with a convincing solution for its beleaguered UK retail
customer business: together with its competitor SSE, it wants to create a strong, independent retail company in
the United Kingdom. In the following, we will present the major events that occurred in 2017 and the beginning of
2018. We have limited ourselves to events that have not been commented on in detail elsewhere in this report.

Events in the fiscal year

German Constitutional Court declares nuclear fuel tax
null and void. In the middle of April 2017, the German
Constitutional Court ruled that the German Nuclear Fuel Tax
Act was in violation of basic law and thus null and void.
The decision was announced on 7 June. The Act had been
passed by the German Lower House of Parliament at the
end of October 2010 without involving the Upper House and
expired at the end of 2016. It obligated the operators of
nuclear power plants to pay a tax on the fuel used in their
stations. Since 2011, RWE had filed appeals in court and
with the authorities due to the doubts it had in relation to
the Act’s conformity with EU legislation and the German
constitution. The Hamburg Fiscal Court shared our concerns
and submitted the matter to the Constitutional Court. The
constitutional judges found that the federal legislator was not
authorised to introduce the nuclear fuel tax because it is not
classified as a consumption tax within the meaning of Article
106 of German Basic Law. We had made payments totalling
some €1.7 billion during the levy period, which was from 2011
to 2016. We were refunded this sum in addition to accrued
interest. We recognised the tax refund in the non-operating
result and the interest in the other financial result. This did
not affect adjusted EBITDA or adjusted net income.

RWE AG Executive Board plans special dividend of €1 from
nuclear fuel tax refund. Due to the reimbursement of the
nuclear fuel tax at the beginning of May 2018, the Executive
Board of RWE AG plans to pay a special dividend of €1 per
share in addition to the regular dividend of €0.50 per share.
We announced this in June 2017 after consulting with the
Supervisory Board. The dividend proposal will be submitted
to the Annual General Meeting on 26 April 2018 for the
passage of a corresponding resolution. Based on the total
of 614.7 million RWE shares, including 39 million preferred
shares, the planned special disbursement amounts to
€615 million. We are using most of the tax refund to increase
our financial strength.

RWE sheds majority stake in Mátra. In the middle of
December, RWE Power and EnBW signed a contract for the
joint sale of their shareholdings of 50.9 % and 21.7 % in
the Hungarian electricity generator Mátrai Erőmű Zrt. (Mátra
for short). The buyer is a consortium made up of EP Holding,
which is based in the Czech Republic, and Hungarian investor
Lőrinc Mészáros. The transaction is scheduled for completion
in the spring of 2018. Our rationale for the sale is that we
want to focus our conventional electricity business on the
core markets Germany, the United Kingdom and the Benelux
region. Mátra specialises in producing and generating
electricity from lignite. The company has slightly more
than 2,000 people on its payroll and has a net generation
capacity of about 840 MW.

Further divestments in the generation business. We
completed the sale of the following investments and assets
last year:

• Unit 5 of the Hamborn CHP station: the plant was sold to

its former leaseholder thyssenkrupp Steel Europe (TKSE) at
the end of May. It is located on the premises of the steel
mill of TKSE in Duisburg, Germany, which is its operator.
The unit is gas-fired and has a nominal electric capacity of
225 MW (net).

• Stakes in two residential property companies in the Rhenish
lignite mining region: the interests of 50 % and 15 % held by
RWE Power in Wohnungsbaugesellschaft für das Rheinische
Braunkohlenrevier GmbH (WBG) and GSG Wohnungsbau
Braunkohle GmbH were acquired by the Gelsenkirchen-based
real estate company Vivawest in July. The price is a
mid-range double-digit million euro amount. Together, WBG
and GSG own approximately 1,800 rented apartments and
1,200 garages and parking spaces in 320 buildings in the
Cologne-Aachen-Grevenbroich area. In addition, they
manage some 150 residential units for third parties. The
companies’ original objective was to offer housing to
miners, but there is hardly any need for this now.

38 RWE Annual Report 2017

• Littlebrook power plant site: in September, we sold most
of the site to the UK property investor Tritax Big Box
REIT plc. A smaller part had already been sold to the
transmission system operator National Grid in August.
The property sales resulted in total euro proceeds in the
upper double-digit million range. The Littlebrook site is
situated on the banks of the River Thames in Dartford,
east of London. Until the end of March 2015, we operated
an oil-fired power plant there. Due to stricter emission
limits for large combustion plants, the station had to be
shut down.

innogy and SSE intend to combine UK retail operations.
At the beginning of November, innogy and its British
competitor SSE agreed to establish an independent retail
company in the United Kingdom by merging operations.
innogy will transfer its entire UK retail business to the new
company. SSE will contribute its residential customer
business and its activities in the field of energy solutions but
retain corporate customer sales and the Irish business. The
merged retail company is expected to have a premium listing
on the London Stock Exchange. innogy will take a 34.4 %
non-controlling interest in the company, and SSE intends to
demerge its 65.6 % interest to its shareholders. The transaction
is subject to approval from the competition and regulatory
authorities and SSE’s shareholders. Including the listing, the
deal is expected to close in the fourth quarter of 2018 or the
first quarter of 2019. Until then, innogy and SSE will run their
retail operations completely independently of one another.

This transaction is happening against the backdrop of the
difficult framework conditions in the UK supply market,
which is characterised by extremely high competitive pressure
and continued political intervention to the detriment of the
companies. In this challenging environment, the creation of
a large independent retail company provides additional
opportunities to win customers through attractive offers and
good service. innogy’s UK renewables business will not be
affected by the transaction. This is an area in which our
subsidiary wants to continue growing, in particular by investing
in wind farm projects.

innogy receives subsidy contract for Triton Knoll offshore
wind farm and becomes project’s sole owner. In the
middle of August, innogy won a tender for the Triton Knoll
offshore wind project from the UK Department for Business,
Energy and Industrial Strategy. The decision was reached by
way of an auction. The project, which involves the construction
of wind turbines with a combined capacity of approximately
860 MW off the eastern coast of England, has an estimated
investment volume of £2 billion. The state guarantees £74.75
in compensation for each MWh of electricity fed into the grid
from the wind farm for a period of 15 years. Until recently,
Statkraft also held a stake in Triton Knoll, but in October 2017
the Norwegian energy utility sold its 50 % interest to innogy,
which is now the project’s sole owner. The Triton Knoll site
has favourable wind conditions and moderate water depths.
All of the permits necessary for the wind farm have already
been obtained. The final investment decision is scheduled to
be made in the middle of 2018 and, based on current plans,
the turbines could start being commissioned in 2021.

In the United Kingdom, renewable energy has been
subsidised via a mechanism called ‘contract for difference’
(CfD) since April 2015. If the price received by an operator
on the wholesale market is lower than a guaranteed payment,
the operator is reimbursed the difference. If the price is
higher, the payment must be made by the operator. Projects
qualifying for subsidies are chosen as follows: if a subsidy
pool for a certain generation technology is large enough, all
applicants receive a CfD. If the pool is insufficient, an auction
determines who receives the awards.

Acquisition of Belectric Solar & Battery and wind power
project pipeline in the USA. Last year, innogy took further
steps for the successful implementation of its growth strategy.
In early January 2017, it acquired the ground-mounted solar
collector and battery storage specialist Belectric Solar & Battery
GmbH for €74 million. The acquired company is headquartered
in Kolitzheim, Germany, and has built solar collectors with a
total net installed capacity of over 1.6 GW since its inception
in 2001. Belectric is also the operator of a large number of
these units. Furthermore, the company develops turnkey,
large-scale battery storage solutions.

Combined review of operations > Major events

In the USA, innogy secured a project pipeline for onshore
wind turbines with a total net installed capacity of over
2 GW. The seller is the British investment company Terra Firma
Capital Partners. The transaction was contractually agreed
in December 2017 and is scheduled to be completed in the
second quarter of 2018. It requires the approval of the
Committee on Foreign Investment in the United States. The
acquired project portfolio encompasses more than 20 ventures
distributed over seven states and in various phases of
development. innogy will review the projects for profitability
and keep all of its options open in terms of financing and
ownership structure for the time being.

Zuidwester and Nordsee One wind farms officially go
online. Last year, two large wind energy projects in which
innogy was involved were completed successfully. First the
wind farms constructed as part of the Noordoostpolder
large-scale project were inaugurated in mid-June, including
the innogy wind farm Zuidwester with a capacity of 90 MW.
Zuidwester is located at the IJsselmeer. Its twelve onshore
turbines are currently some of the most powerful in the
world, capable of generating 7.5 MW each. They replace
50 smaller turbines installed in the 1980s and 1990s. As a
result of this, the capacity of Zuidwester has increased six-fold.
innogy has invested approximately €150 million in this wind
farm, which has been generating electricity at full capacity
since early 2017. Numerous companies are participating in
Noordoostpolder. A total of 86 turbines with a total capacity
of around 430 MW, located nearshore in the IJsselmeer and
onshore along the dyke, have been built within the scope of
Noordoostpolder.

In December, the Nordsee One offshore wind farm, with a
generation capacity of 332 MW, was completed. Nordsee
One is located approximately 40 kilometres north of the East
Frisian Isle of Juist. Its main owner is the Canadian power
utility Northland Power. innogy holds a 13.5 % stake. The
wind farm has been generating electricity with all 54 of its
turbines since September 2017. However, the construction
work lasted until the end of the year. A total of €1.2 billion
was invested in the project.

Starting shot for UK capacity market. The first twelve-month
period of the UK capacity market began on 1 October 2017.
During this period, the generators are paid £6.95 per kilowatt
for the availability of the generation capacity that they
guarantee. The payment was determined in early 2017 by
way of an auction, in which all RWE stations involved qualified
for a combined 7.9 GW in capacity payments. The bidding
procedure involved a total of 59.3 GW in generation capacity,
of which 54.4 GW won a contract. It was the fourth auction
for the UK capacity market. The three preceding ones related
to later periods. The auction procedure is as follows: the
state calls for tenders for a certain amount of secured capacity.
The participants submit bids as a minimum payment that
they require for keeping their plant available during a
pre- defined period. For old stations, this period generally lasts
for twelve months, and for new stations, it can be extended
to 15 years. The auction determines the level of the payment
at which supply and demand are in line with each other. This
is the amount received by all bidders which have submitted
offers for a subsidy at or below that level. Participation in
the capacity auctions is voluntary and technology-neutral.
Plants that already receive other subsidies do not qualify.
The first capacity auction was held in December 2014 and
related to the period from October 2018 to September 2019,
whereas the two following auctions each covered the next
twelve months. This is because the original plan was to begin
making payments in October 2018. To avoid supply shortfalls,
which may have occurred if hard coal-fired power plants had
been forced by the market to shut down, the UK government
expedited the start of the capacity market by a year.

RWE equips Eemshaven and Amer 9 hard coal-fired power
stations for biomass co-firing. In the first half of 2017, we
decided to retrofit our hard coal-fired power plants Eemshaven
and Amer 9 for co-firing with biomass. The Dutch state
approved subsidies of up to €2.6 billion for the two plants.
Along with the retrofits, the subsidies will also finance the
additional expenses for procuring fuel. We will receive these
funds over a period of eight years. The subsidies are allocated
so that Eemshaven can achieve a biomass ratio of 15 % and
Amer 9 a ratio of 80 % (instead of the previous 35 %). The
Eemshaven power station has a net installed capacity of
1,554 MW and has been generating electricity since 2014.
Amer 9 has a net capacity of 643 MW and has been in
operation since 1993. In the event of a retrofit to achieve the
aforementioned ratios, we would produce environmentally
friendly electricity using a total of 2.5 million metric tons of
biomass per year, allowing us to lower our annual CO2
emissions by roughly 4 million metric tons. We will mainly
source the ‘green’ fuel in Europe and America, ensuring that
the requirements of the Dutch sustainability protocol for
biomass are satisfied. The protocol was developed by the

40 RWE Annual Report 2017

Dutch government together with energy companies and
non-governmental organisations and has been proven in tests.

Gundremmingen B nuclear power station shut down.
Unit B of the Gundremmingen nuclear power plant was taken
offline for good on 31 December 2017. The station’s
decommissioning is mandated by law as a result of the
government’s decision in 2011 to phase out nuclear energy.
Unit C, which is identical and adjacent to Unit B at the
Gundremmingen site, has permission to produce electricity
until the end of 2021. RWE and E.ON hold stakes of 75 %
and 25 % in the two units, respectively. Gundremmingen B
had a net installed capacity of 1,284 MW and was
commissioned in 1984 after eight years of construction.
Since then, except during brief downtimes for inspection
and maintenance, it contributed to the supply of electricity
around the clock, both reliably and with zero carbon
emissions. At approximately 330 billion kWh, its cumulative
generation corresponds to half the amount consumed in
Germany in a year.

Peter Terium leaves innogy. The Chairman and CEO of
innogy SE, Peter Terium, left the company on 19 December
2017 by amicable and mutual agreement with the Supervisory
Board. His successor had not yet been chosen when the
review of operations was prepared. Uwe Tigges, who is in
charge of the human resources office on the Executive
Board, is the Board’s Interim Chairman. In connection with
this personnel decision, the Supervisory Board of innogy SE
emphasised that it is generally supportive of the course
charted by the Executive Board, but that it wishes that cost
discipline be given a higher priority. Mr. Terium had held
various positions in the RWE Group since 2003. He assumed
chairmanship of the Executive Board of RWE AG in July 2012
and did the same at innogy SE in April 2016. After the
successful IPO of our subsidiary in October 2016, he only
worked for innogy. Mr. Terium was instrumental in the
company advancing to become a trailblazer of sustainable
and intelligent energy supply.

Events after the close of the fiscal year

UK capacity market auction for 2021/2022: RWE secures
payment for 6.6 GW in generation capacity. Two further
auctions for the UK capacity market were held at the beginning
of 2018. The focus was on the bidding process for the delivery
period from 1 October 2021 to 30 September 2022, which
ended after three days on 8 February 2018. With the exception
of the Aberthaw hard coal-fired power plant and some small
new-build projects, all RWE stations entered in the auction
qualified for a capacity payment. Together, they account for
6.6 GW of secured capacity. However, the £8.40/kW capacity
payment (before adjustment for inflation) determined by the
tender was far below market expectations. Existing stations
and new build projects with a total of 74.2 GW in generation
capacity entered the auction, 50.4 GW of which received a
capacity payment.

A few days before, a further auction took place, relating to
the period from 1 October 2018 to 30 September 2019. An
auction had already been held for this period in December
2014, at which stations accounting for a combined 49.3 GW
(including 8.0 GW of RWE) qualified for a payment of
£19.40/kW. The recent auction served the purpose of closing
remaining capacity gaps. Additional generation capacity
of 5.8 GW was auctioned at a price of £6.00/kW. RWE had
participated in the procedure with a small unit, which will
not receive a payment.

Combined review of operations > Business performance

1.6 BUSINESS PERFORMANCE

The RWE Group achieved its earnings goals for 2017. This was mainly thanks to a greatly improved performance in
energy trading. In addition, we posted above-average income from the commercial optimisation of our power plant
deployment. This is why our adjusted EBITDA was actually slightly higher than anticipated, totalling €5.8 billion,
whereas adjusted net income was at the upper end of the forecast range, amounting to €1.2 billion. However, the
encouraging overall picture should not belie the fact that the margins of our coal-fired and nuclear power stations
have deteriorated further. The significant decline in electricity prices of earlier years came to bear here. However, we
slightly cushioned the margin drops through our ongoing efficiency programme.

Business performance in 2017: What we forecast and what we accomplished

Outlook vs. actual

Adjusted EBITDA

Lignite & Nuclear

European Power

Supply & Trading

innogy

Adjusted net income

2016 actual
€ million

Outlook for fiscal 20171

2017 actual
€ million

Forecast fulfilled?

5,403

1,079

377

– 139

4,203

777

€5.4 billion to €5.7 billion

5,756

Actual > Outlook

Significantly below previous year

Significantly above previous year

Moderately above previous year

€1.0 billion to €1.3 billion

671

463

271

4,331

1,232

Yes

Actual > Outlook

Yes

1 See page 87 et seq. of the 2016 Annual Report and page 13 of the Interim statement on the first quarter of 2017.
Qualifiers such as ‘moderately’ or ‘significantly’ indicate percentage deviations from the previous year’s figures.

Electricity production 6 % down on previous year. In the
financial year that just came to a close, the RWE Group
produced 202.2 billion kWh of electricity. In 2017, 37 % of
our electricity generation was from lignite, 27 % from gas,
15 % from both hard coal and nuclear, and 6 % from
renewables. Power production was 6 % lower year on year.
The contribution made by hard coal dropped considerably.
Unfavourable market conditions played a role. Furthermore,
the Voerde A/B hard coal-fired power station was shut down as
of 1 April 2017. The two units each had a net installed
capacity of 695 MW and belonged to Steag (75 %) and RWE
(25 %). As the sole marketer, we disclosed its electricity as
part of our generation. There were no major changes in the
amounts of electricity that we generated from other energy
sources. Our gas-fired power plants increased their production
slightly, because market conditions improved in Continental
Europe. In the United Kingdom, however, some of these
stations were taken offline for extended periods of time for
retrofits. We also posted a marginal gain in electricity
generation from renewables. This was mainly because
innogy commissioned new wind turbines and utilisation of

existing wind power capacity rose due to the weather.
Conversely, dry weather curtailed the production output of
German hydroelectric power stations. Volumes also shrank
due to the sale of the 33.3 % stake in the wind energy
producer Zephyr Investments Limited in July 2016 (see 2016
Annual Report, page 40): based on contractually agreed
electricity purchases, our reporting had included a portion of
the generation and capacity of Zephyr’s UK wind farm
portfolio. In lignite- based power generation, opposing factors
almost neutralised each other. There was a decline in
outages owing to damage at power plants and scheduled
maintenance. At the same time, however, two lignite units
with net installed capacities of 284 MW and 278 MW were
decommissioned as of 1 October 2017 and put into
legally-mandated standby (see page 20).

In addition to our in-house generation, we procure electricity
from external suppliers. In the year being reviewed, these
purchases totalled 76.0 billion kWh (previous year: 65.3 billion
kWh). In-house generation and power purchases combined
for 278.2 billion kWh in total electricity production (previous
year: 281.4 billion kWh).

42 RWE Annual Report 2017

Power generation

Gas

Lignite

Hard coal

Nuclear

Renewables

Total

Pumped
storage,
other

Billion kWh

Lignite & Nuclear

European Power

of which:

Germany1

United Kingdom

Netherlands/Belgium

innogy

RWE Group

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

–

74.2

74.3

–

30.3

30.1

52.9

52.6

7.4

6.3

32.4

36.2

9.3

1.0

6.9

0.7

–

29.3

44.2

13.3

22.4

2.6

6.7

13.4

15.1

0.1

–

53.9

53.3

74.2

74.3

29.4

44.3

30.3

30.1

–

1.1

0.7

0.4

–

1.1

0.7

0.4

–

10.2

11.3

10.0

11.1

0.7

2.4

0.4

2.6

105.2

104.8

85.7

100.5

2.4

2.6

–

23.8

35.4

22.7

11.3

32.0

43.3

22.0

10.8

3.1

3.0

202.2

216.1

1 Including electricity from generation assets not owned by RWE that we can deploy at our discretion on the basis of long-term agreements. In 2017, it amounted to

6.3 billion kWh (previous year: 10.6 billion kWh).

One of Europe’s biggest power producers, with 43.3 GW
in generation capacity. At the end of 2017, we had a total
installed power generation capacity of 43.3 GW, giving us a
leading market position in Europe. This figure includes the
two lignite units that we put into standby and mothballed
stations which are not currently operated for economic
reasons. It also includes plants owned by third parties that
we can deploy at our discretion on the basis of long-term
agreements. Our generation capacity declined by 3.1 GW
last year. This was primarily because we shut down the
Voerde A/B hard coal-fired power station (1,390 MW) as of
1 April 2017 and the Gundremmingen B nuclear power
station (1,284 MW) as of 31 December 2017. At innogy,
the closure of two hard coal units of the Saarland-based
subsidiary VSE led to a drop in capacity, whereas the

commissioning of new wind turbines had a counteracting
effect. The sale of the Hungarian lignite- based electricity
generator Mátra contractually agreed in December 2017
(see page 37) did not affect the disclosed generation
capacity, as the transaction had not closed as of the
balance-sheet date.

In terms of generation capacity, gas is our major source of
energy. At the end of 2017, it accounted for 35 %. Lignite
was in second place with 25 %, followed by hard coal, with
17 %. Renewables and nuclear energy had a share of 10 %
and 6 %, respectively. The geographic focus of our generation
business is Germany, where 59 % of our installed capacity
is located. The United Kingdom and the Netherlands follow,
accounting for shares of 22 % and 13 %, respectively.

Power generation capacity
As of 31 Dec 2017, in MW

Lignite & Nuclear

European Power

of which:

Germany1

United Kingdom

Netherlands /Belgium

Turkey

innogy

RWE Group

Gas

Lignite

Hard coal

Nuclear

Renewables

460

11,017

14,382

3,867

6,662

3,066

787

234

–

7,292

3,675

1,560

2,057

–

2,770

–

15,076

11,017

7,302

2,770

261

151

–

3,864

4,148

Pumped
storage,
other

2,792

2,528

264

–

137

2,956

Total

Total
31 Dec 2016

14,297

24,727

15,764

26,116

10,125

11,518

8,541

5,274

787

4,245

8,546

5,265

787

4,531

43,269

46,411

1 Including generation capacity not owned by RWE that we can deploy at our discretion on the basis of long-term agreements. As of the end of 2017, it amounted to 2,986 MW

(previous year: 4,373 MW).

Combined review of operations > Business performance

Significant decline in CO2 emissions. Last year, our power
stations emitted 132.4 million metric tons of carbon dioxide.
Our own plants accounted for 129.3 million metric tons, and
the remaining 3.1 million metric tons came from contractually
secured capacity. Compared to 2016, our CO2 emissions
declined by 15.9 million metric tons, or 11 %. Specific emissions,
i. e. carbon dioxide emissions per megawatt hour of electricity
generated, also declined, dropping from 0.686 to 0.655 metric
tons. This was mainly because last year we produced much
less electricity from coal.

Since the beginning of the third emissions trading period,
which started on 1 January 2013, the countries of Western
Europe have only allocated free emission allowances to
energy utilities in exceptional cases. Of the 131.0 million
metric tons of carbon dioxide that we emitted in EU countries
in 2017, we were only able to cover 1.6 million metric tons
with such allocations. In the previous year, we had received
free certificates for 4.5 million metric tons, more than half
of which were for unit 5 of the Hamborn CHP station, which
has since been sold.

Emissions balance

Million metric tons of CO2
Lignite & Nuclear

European Power1

of which:

Germany2

United Kingdom

Netherlands /Belgium

innogy

RWE Group

CO2 emissions
2017

88.5

43.3

14.1

14.0

13.8

0.6

2016

88.6

59.0

24.7

19.1

14.0

0.7

132.4

148.3

Free allocation of CO2 certificates
2016

2017

0.7

0.6

–

0.3

1.6

0.8

3.4

–

0.3

4.5

Shortage of CO2 certificates

2017

87.8

41.3

13.5

14.0

13.8

0.3

2016

87.8

54.4

21.3

19.1

14.0

0.4

129.4

142.6

1 Includes the CO2 emissions of our gas-fired power station in the Turkish town of Denizli, which amounted to 1.4 million metric tons in 2017 (previous year: 1.2 million metric

tons). As Turkey does not participate in European emissions trading, we do not need emission allowances for these volumes.

2 Including generation capacity not owned by RWE that we can deploy at our discretion on the basis of long-term contracts. In 2017, these stations emitted a total of 3.1 million

metric tons of CO2 (previous year: 7.1 million metric tons).

91.3 million metric tons of lignite produced. The fuel used
by our power stations is procured by our generation companies
either directly on the market or via RWE Supply & Trading.
We source lignite from proprietary opencast mines. In our
main mining region, which is west of Cologne, we produced
91.3 million metric tons of lignite last year (previous year:

90.5 million metric tons), of which 79.3 million metric tons
were used to generate electricity in our power plants. The
remainder was used to manufacture refined products (e. g.
lignite briquettes) and, to a limited extent, to generate
process steam and district heat.

44 RWE Annual Report 2017

External electricity sales volume

Residential and
commercial customers

Industrial and
corporate customers

Distributors

Total

Billion kWh

Lignite & Nuclear

European Power

Supply & Trading

innogy

RWE Group2

2017

0.2

–

50.4

50.6

2016

0.2

–

52.3

52.6

2017

–

2.2

35.6

70.7

2016

–

2.4

30.3

73.5

108.5

106.2

2017

12.0

5.2

–

84.8

102.0

2016

12.5

5.0

–

79.3

96.8

2017

12.2

7.4

35.61

205.9

261.1

2016

12.7

7.4

39.31

205.1

264.6

1 Including volume effects of the sale of self-generated electricity on the wholesale market. If these sales volumes exceed the purchases made for supply purposes, the difference

is recognised in the sales volume. This was not the case in fiscal 2017, whereas in 2016, there was a positive balance of 9.0 billion kWh.

2 Including volumes subsumed under ‘other, consolidation’.

Electricity sales volume slightly down year on year. In the
year under review, RWE sold 261.1 billion kWh of electricity
to external customers, slightly less than in 2016. One reason
for this decline was that our generation output shrank and
RWE Supply & Trading therefore sold less electricity from
RWE power plants on the wholesale market (see footnote 1

to the above table). Furthermore, innogy lost customers in
the residential and corporate retail business, above all
in the United Kingdom and the Netherlands. However, our
subsidiary offset these sales shortfalls by adding new
customers and intensifying its supply activities with existing
customers at German distributors.

External gas sales volume

Residential and
commercial customers

Industrial and
corporate customers

Distributors

Total

Billion kWh

Supply & Trading

innogy

RWE Group

2017

–

100.6

2016

–

102.9

2017

26.8

67.6

94.4

2016

24.7

83.1

107.8

2017

0.7

58.4

59.1

2016

0.3

54.1

54.4

2017

27.5

226.6

254.1

2016

25.0

240.1

265.1

Gas supply volume down 4 %. At 254.1 billion kWh, gas
sales were 4 % lower year on year, despite marginal gains in
the Supply & Trading division. A major reason for this was
that industrial and corporate customers served by innogy
switched suppliers. This comes to bear especially in sales
volumes in Eastern Europe. Our subsidiary also suffered

declines in volumes in the residential sector due to competition.
However, these were moderate and predominantly related
to the Dutch and UK businesses. Similar to electricity, the
aforementioned drops in sales were contrasted by higher
deliveries to German distributors.

Combined review of operations > Business performance

External revenue
€ million

Lignite & Nuclear

European Power

Supply & Trading

innogy

Other, consolidation

RWE Group

Natural gas tax /electricity tax

RWE Group (excluding natural gas tax /electricity tax)

+/–
%

– 1.4

– 5.9

– 12.5

– 1.7

– 76.1

– 2.7

– 4.1

– 2.7

2017

2016

1,176

728

3,189

39,475

44,585

2,151

42,434

1,193

774

3,646

40,149

45,833

2,243

43,590

External revenue slightly lower year on year. The RWE Group
generated €44,585 million in external revenue. This figure
includes natural gas and electricity tax. Compared to the
preceding year, our revenue declined by 3 %. €31,665 million
stemmed from the sale of electricity and €10,012 million
from the sale of gas. We recorded declines of 3 % for both

products, primarily due to the drop in supply volumes. The
development of revenue was slightly affected by changes
in foreign exchange rates. On average, sterling, our most
important foreign currency, dropped from €1.22 to €1.14.
As a consequence, revenue generated in the UK was lower
when converted to euros.

Adjusted EBITDA
€ million

Lignite & Nuclear

European Power1

Supply & Trading

innogy

Other, consolidation

RWE Group

1 Thereof UK: €205 million (2017) and €270 million (2016).

Adjusted EBITDA of €5.8 billion slightly higher than
forecast. In the fiscal year that just ended, we achieved
adjusted EBITDA of €5,756 million. Compared to 2016, this
represents a rise of 7 %, primarily due to a significantly
improved performance in energy trading. In addition, costs
incurred to operate and maintain distribution networks
dropped, while declining generation margins weighed on
earnings. The outlook that we published in March 2017
envisaged adjusted EBITDA in the range of €5.4 billion to
€5.7 billion (see 2016 Annual Report, page 87 et seq.).
We closed the reporting year slightly above this range in
part due to unexpectedly high revenue from the commercial
optimisation of our power plant dispatch.

2017

2016

671

463

271

4,331

5,756

1,079

377

– 139

4,203

– 117

5,403

+/–
%

– 37.8

22.8

295.0

3.0

117.1

6.5

The following is a breakdown by segment:

• Lignite & Nuclear: Here, adjusted EBITDA experienced a
significant decline as expected, dropping by 38 % to
€671 million. The main reason for this is that we realised
lower wholesale prices for the generation from our
lignite-fired and nuclear power stations than in 2016. We
had already sold forward nearly all of the production
of these plants in earlier years. Another reason for the
decline in earnings was that in 2016 adjusted EBITDA
included one-off income from the reversal of mining
provisions. Moreover, the earnings of Mátra in Hungary
deteriorated. Due to the company’s impending sale, we
stopped recognising the earnings it achieved after 1 April
2017 in adjusted EBITDA, recording them instead in the
non-operating result. A positive effect was felt from the
fact that we no longer have to pay a nuclear fuel tax. In
addition, we benefited from the resolute continuation of
our efficiency-enhancement programme.

46 RWE Annual Report 2017

• European Power: Adjusted EBITDA in this segment rose by
23 % to €463 million. We therefore exceeded the March
forecast, which had envisaged a significant decline. Two
factors were instrumental in this: we achieved above-
average earnings from the commercial optimisation of our
power plant deployment, and the sale of the former
Littlebrook power plant site resulted in a book gain, which
we had not planned (see page 38). The rise in adjusted
EBITDA can also be traced back to efficiency-enhancing
measures. Whereas the market conditions for our hard
coal-fired power stations worsened, they improved for our
gas-fired power plants. Our accrual of provisions for
impending losses from an electricity procurement contract
in the preceding year had a major effect on the development
of earnings. However, we also recorded exceptional income
in 2016: it stemmed in part from property sales, the
reversal of restructuring provisions, and the final settlement
of damage caused to the new hard coal-fired power plant
at Hamm (Westphalia).

• Supply & Trading: Here, adjusted EBITDA grew from
– €139 million to €271 million. The significant rise in
earnings we had forecast was therefore achieved. The
main reason for this was the normalisation of our trading
performance compared to the extremely weak performance
in the prior year. Moreover, we posted substantial earnings
in the gas business. A counteracting effect was felt because
adjusted EBITDA for 2016 included our profit on the sale
of the Lynemouth hard coal-fired power station in the
United Kingdom (see page 22).

• innogy: At €4,331 million, adjusted EBITDA of our subsidiary
met our forecast, rising by 3 % compared to 2016. The grid
business was the main contributor: in Germany, network
operation and maintenance costs declined. In addition, the
reversal of provisions resulted in a profit, whereas 2016
was burdened by the accrual of provisions. Moreover, in
the Czech Republic, transit volumes in the gas distribution
network were above average in 2017 due to the weather.
innogy also posted a gain in renewable energy, albeit
only to a moderate extent. One-off income resulting from
the revaluation of our subsidiary’s shares in the Triton Knoll
offshore wind project played a role. The commissioning
of new wind turbines and improved wind conditions also
contributed to the increase in earnings. However, this was
contrasted by negative effects of the reduction in the use
of German hydroelectric power stations and the weak
British pound. Furthermore, the previous year’s figure
included one-off income from minor divestments. Adjusted
EBITDA in retail declined slightly, in part due to a drop in
income from the reversal of provisions for legal risks in
Germany. Efficiency-improving measures provided relief in
the UK retail business, which is run by the innogy subsidiary
npower. However, npower continued to have difficulty in
coping with the high competitive pressure. Many of the
company’s customers switched providers or could only be
retained by offering them contracts with more favourable
conditions. In addition, there was a rise in upfront costs.
An increase in standard tariffs for electricity and gas, which
became effective in the middle of March, only partially
offset the aforementioned burdens.

Adjusted EBIT
€ million

Lignite & Nuclear

European Power1

Supply & Trading

innogy

Other, consolidation

RWE Group

1 Thereof UK: €40 million (2017) and €97 million (2016).

2017

2016

399

155

265

2,816

3,646

664

– 37

– 145

2,735

– 135

3,082

+/–
%

– 39.9

518.9

282.8

3.0

108.1

18.3

Combined review of operations > Business performance

Adjusted EBIT characterised by significant drop in operating
depreciation. Adjusted EBIT rose by 18 % to €3,646 million.
The percentage increase was therefore much bigger than for
adjusted EBITDA. The backdrop to this is that adjusted EBIT
includes operating depreciation and amortisation, which

decreased considerably. This drop is largely because we
recognised substantial impairments in the 2016 consolidated
financial statements (see 2016 Annual Report, page 48) and
the asset base for scheduled depreciation was therefore lower.

2017

118

– 719

– 479

1,241

161

2016

– 799

–

– 5,956

– 6,661

+/–
€ million

– 479

7,197

6,822

• Unlike in the prior year, we recognised a goodwill

impairment loss of €479 million. It relates to innogy’s UK
retail business, the medium-term earnings prospects of
which have worsened.

• The earnings stated under ‘other’ improved by €7,197 million
to €1,241 million. The main reason was that the financial
statements for the preceding year included significant
one-off burdens, including impairments of €4.3 billion for
power plants and other property, plant and equipment.
We also recognised impairment losses in 2017 primarily
related to the Hungarian lignite-based power generator
Mátra. However, at €0.3 billion, they were far below the
figure recorded in the prior year. Another factor contributing
to the improvement in earnings was that the German
government refunded us the €1.7 billion in nuclear fuel
tax levied from 2011 to 2016 after the German Constitutional
Court declared the levy null and void (see page 37). In
addition, splitting the Conventional Power Generation
division into the Lignite & Nuclear and European Power
segments led to one-off effects, which were positive on
balance (see page 107 in the Notes).

Non-operating result
€ million

Capital gains/losses

Impact of derivatives on earnings

Goodwill impairment losses

Other

Non-operating result

Reconciliation to net income: substantial exceptional
income from the nuclear fuel tax refund. The reconciliation
from adjusted EBIT to net income was characterised by the
positive effects we felt from the refund of the German nuclear
fuel tax. However, opposing effects of impairments also came
to bear.

The non-operating result, in which we recognise certain one-
off effects which are not related to operations or to the period
being reviewed, improved by €6,822 million to €161 million.
Its components developed as follows:

• Book gains on the disposal of investments and assets
totalled €118 million (previous year: €94 million). This
includes income we achieved through the sale of Unit 5 of
the Hamborn CHP station in Germany and stakes in two
residential property companies in the Rhenish lignite mining
region. More detailed information on the aforementioned
transactions can be found on page 37.

• Changes in the value of certain derivatives which we

use to hedge against price fluctuations reduced earnings
by €719 million (previous year: €799 million). Pursuant to
International Financial Reporting Standards (IFRS), derivatives
are accounted for at fair value at the corresponding
balance-sheet date, whereas the transactions which are
hedged with the derivatives are only recognised as a
profit or loss when they are realised. These timing differences
result in short-term effects on earnings, which are
neutralised over time.

48 RWE Annual Report 2017

Financial result
€ million

Interest income

Interest expenses

Net interest

Interest accretion to non-current provisions

Other financial result

Financial result

2017

220

– 907

– 687

– 261

197

– 751

2016

271

– 914

– 643

– 1,288

– 297

– 2,228

+/–
€ million

– 51

– 44

1,027

494

1,477

Our financial result improved by €1,477 million to – €751 million.
Its components changed as follows:

• Net interest decreased by €44 million to – €687 million.
Last year, we sold a portion of the securities we held in
order to pay into the nuclear energy fund, resulting in a
reduction in interest income. Furthermore, hybrid bond
buybacks in October 2017 led to one-off expenses because
the repurchase prices were above the issue prices. A
positive effect was felt from the fact that we redeemed
several bonds with relatively high coupons in 2016 and
2017 and that we took advantage of very low market interest
rates when raising debt capital.

• The interest accretion to non-current provisions improved
by €1,027 million to – €261 million. This is in part due to
the contribution to the nuclear energy fund, as this caused

the level of the provisions that accrue interest to become
much lower. Furthermore, we apply a lower real discount rate
to the portion of the nuclear energy obligations remaining
with RWE. This is one of the reasons why the interest
accretion was lower. The reduction in interest had already
been considered in the 2016 consolidated financial
statements by a corresponding increase in provisions and
had been reflected as a negative one-off effect in the
interest accretion.

• The ‘other financial result’ rose by €494 million to

€197 million. This item includes the interest which we
received from the German government on the nuclear
fuel tax which has been refunded. This played a major role
in improving earnings. Moreover, we booked much lower
losses from the sale of securities than in 2016.

Reconciliation to net income

Adjusted EBITDA

Operating depreciation, amortisation and impairment losses

Adjusted EBIT

Non-operating result

Financial result

Income before taxes

Taxes on income

Income

of which:

Non-controlling interests

RWE AG hybrid capital investors’ interest

Net income/income attributable to RWE AG shareholders

Adjusted net income

Earnings per share

Adjusted net income per share

Number of shares outstanding (annual average)

Effective tax rate

2017

2016

5,756

– 2,110

3,646

161

– 751

3,056

– 741

2,315

373

1,900

1,232

3.09

2.00

614.7

5,403

– 2,321

3,082

– 6,661

– 2,228

– 5,807

323

– 5,484

167

– 5,710

777

– 9.29

1.26

614.7

+/−
%

6.5

9.1

18.3

102.4

66.3

152.6

– 329.4

142.2

123.4

– 28.8

133.3

58.6

133.3

58.7

–

€ million

€

millions

Combined review of operations > Business performance

Income before tax grew by €8,863 million to €3,056 million.
Our effective tax rate was 24 % and therefore below the
(theoretical) standard rate of 32.5 %. A major factor was that
we were able to offset tax losses from previous years, for
which no deferred tax assets were recognised, against current
earnings. Earlier, we did not believe that we could use the
loss carryforwards for an extended period of time due to a
lack of tax gains. However, this became possible in 2017
because the nuclear fuel tax refund made a substantial
contribution to earnings. The low effective tax rate was also
due to the fact that we booked tax income for earlier years
following tax audits. A counteracting impact was felt from
the goodwill impairment to the UK retail business, which
reduced earnings, but did not affect taxes.

After taxes, we generated income of €2,315 million (previous
year: – €5,484 million). Non-controlling interests rose by
€206 million to €373 million, partly due to the fact that
23.2 % of the shares in innogy have been held by third
parties since the IPO. The impairments recognised at Mátra

in Hungary and in innogy’s UK retail business had a
counteracting impact.

Hybrid capital investors accounted for €42 million of our
earnings (previous year: €59 million). This sum corresponds
to our finance costs after tax. It relates solely to the
£750 million hybrid bond, which is classified as equity under
IFRS, because it has a theoretically perpetual tenor. The
remainder of RWE’s hybrid capital is classified as debt, and
we record interest accrued on it in the financial result.
The decline in the hybrid capital investors’ interest is largely
because the costs of hybrid financing reduced taxes in the
year under review, whereas this was not the case in 2016.

The aforementioned developments resulted in significantly
improvemed net income of €1,900 million (previous year:
– €5,710 million). Based on the 614.7 million in RWE shares
outstanding, earnings per share amounted to €3.09
(previous year: – €9.29).

Reconciliation to adjusted net income

Original figures
2017

Adjustment

€ million

Adjusted EBIT

Non-operating result

Financial result

Income before taxes

Taxes on income

Income

of which:

Non-controlling interests

RWE AG hybrid capital investors’ interest

Net income/income attributable to RWE AG shareholders

3,646

161

– 751

3,056

– 741

2,315

373

1,900

–

– 161

– 309

– 470

111

– 359

309

–

– 668

Adjusted
figures
2017

3,646

–

– 1,060

2,586

– 630

1,956

682

1,232

Adjusted
figures
2016

3,082

–

– 1,818

1,264

– 37

1,227

391

777

Adjusted net income 59 % up year on year. Adjusted net
income totalled €1,232 million, which was at the upper end
of the forecast range of €1.0 billion to €1.3 billion. It differs
from net income in that the non-operating result and
further material special items along with their impact on
income taxes are deducted from it. For example, adjusted

net income does not contain the effects of the nuclear fuel
tax refund. It grew considerably compared to the figure
recorded a year before (€777 million). The improvement in
operating earnings and the financial result came to bear
here, whereas taxes on income and non-controlling interests
had counteracting effects.

50 RWE Annual Report 2017

Capital expenditure on property, plant and equipment and on intangible assets
€ million

2017

2016

+/–
€ million

Lignite & Nuclear

European Power

Supply & Trading

innogy

Other , consolidation

RWE Group

Capital expenditure on financial assets
€ million

Lignite & Nuclear

European Power

Supply & Trading

innogy

Other, consolidation

RWE Group

269

147

1,839

– 2

2,260

267

1,679

2,027

160

– 13

233

2017

2016

+/–
€ million

327

369

290

355

–

– 3

– 26

More capital spent on power stations, IT and financial
assets. The RWE Group’s capital expenditure totalled
€2,629 million in the financial year that just ended. This was
10 % above the previous year’s figure and within the
anticipated range of €2.5 billion to €3.0 billion. Our capital
expenditure on property, plant and equipment and intangible
assets totalled €2,260 million, 11 % more than in 2016.
A large portion of these funds was used to maintain and
modernise opencast mining equipment, power stations, grids

and IT infrastructure, expand renewables and develop
innovative products and services. The increase over 2016
is due in part to retrofits to power stations in the United
Kingdom. Furthermore, innogy stepped up its capital
expenditure on IT. At €369 million, spending on financial
assets was 4 % higher than in 2016. It was mostly
attributable to innogy, the single-largest transaction of
which was the acquisition of Belectric Solar & Battery
(see page 38).

Combined review of operations > Business performance

Workforce 1

Lignite & Nuclear

European Power

Supply & Trading

innogy

Other2

RWE Group

+/–
%

1.2

– 0.6

6.4

4.3

– 83.6

1.5

31 Dec 2017

31 Dec 2016

13,132

2,656

1,156

42,393

210

59,547

12,980

2,672

1,086

40,636

1,278

58,652

1 Converted to full-time positions.
2 At 31 December 2017, almost only employees of the holding company, RWE AG, were stated here. The previous year’s figure included employees of the in-house service
providers RWE Group Business Services (922) and RWE Service (243), which have since been dissolved.

Additional personnel due to the acquisition of Belectric.
As of 31 December 2017, the RWE Group had 59,547 people
on its payroll, of which 35,344 worked at sites in Germany
and 24,203 at locations in other countries. Part-time positions
were calculated in these figures on a pro-rata basis. Headcount
rose slightly compared to the end of 2016: 509 employees
were added in Germany, and 386 were added abroad. One
of the reasons was that innogy acquired Belectric Solar & Battery
at the beginning of 2017. At the segment level, staff figures

were also affected by intragroup transfers. Major changes
resulted from folding RWE Group Business Services and
RWE Service (‘other’ item) into an RWE subsidiary and
transferring most of their personnel to operating Group
companies. The headcount does not include young adults
in professional training programmes. At the end of 2017,
2,215 young adults were learning a profession at RWE,
nearly as many as in the previous year.

52 RWE Annual Report 2017

1.7 FINANCIAL POSITION AND NET WORTH

The RWE Group’s financial position and net worth improved further in the financial year that just ended. The refund
of the nuclear fuel tax by the German government played an important role in this. It helped us to reduce net debt
and increase our equity ratio. However, our contribution to the German nuclear energy fund also placed a heavy
financial burden on us in 2017. Therefore, our operating cash flow was negative. Last year, we successfully completed
the transfer of debt from RWE AG to innogy. In addition, our subsidiary established the last preconditions for being
able to refinance itself independently through banks and on the capital market.

Financing of the RWE Group. Responsibility for financing
within the RWE Group has rested on two shoulders since the
IPO of innogy in October 2016: innogy obtains financing for
the business transferred to it, while RWE AG limits itself to
financing the activities which remain under its operational
management. Companies which are controlled by RWE AG or
innogy SE only raise debt capital in specific cases, for example
if it is more advantageous economically to make use of local
credit and capital markets. RWE AG and innogy SE act as
co-ordinators when subsidiaries assume a liability. This allows
for the central management and monitoring of financial risks.
Moreover, this strengthens our position when negotiating
with banks, business partners, suppliers and customers.

Flexible tools for raising debt capital. As part of the
reorganisation of the RWE Group, we laid the groundwork to
ensure that RWE AG and innogy SE can fulfil their financing
tasks completely independently of each other. This process
was concluded in October 2017. Both companies have a
range of tools which they can use in addition to cash flows
from operating activities to meet their financing needs.

• RWE AG’s and innogy’s Debt Issuance Programmes (DIPs)
give the companies latitude in procuring debt capital on
the capital market over the long term. A DIP is a framework
prospectus for the flexible issuance of senior bonds. RWE
AG updated its programme in May 2017: the new DIP has
a total volume of €10 billion. It is the successor programme
to our former DIP, which had a volume of €30 billion, related
to the RWE Group as a whole and was suspended in 2016.
Since April 2017, innogy has had its own DIP, which allows
a total of €20 billion in senior bonds to be issued. Under
this programme, the company issued two bonds with an
aggregate volume of €1.6 billion last year (see page 54).

• RWE AG has a Commercial Paper Programme for short-term
refinancing that enables it to raise funds equivalent to up
to US$5 billion on the money market. We used a maximum
of only €0.7 billion of this headroom in the past financial
year. Since the end of 2016, innogy has also had a
Commercial Paper Programme. It has a funding framework
of €3 billion. Up to €1.5 billion thereof was used.

• Furthermore, RWE AG and innogy can resort to lines of
credit granted them by international bank syndicates.
These types of instrument serve to secure liquidity. Until
recently, RWE AG had a credit line agreement with a
volume of €4 billion, of which €1.5 billion had been
transferred to innogy on an intra-group basis. On
6 October 2017, our subsidiary then took out its own line
of credit, with a volume of €2 billion. It expires in
October 2022, but can be prolonged twice for a year at a
time. Moreover, the credit line can be topped up by
€1 billion. Both options are subject to the approval of the
consortium of banks. innogy cancelled its participation
in RWE AG’s existing line of credit when it concluded the
new credit line agreement. RWE AG’s existing credit line
was adjusted thereafter and now has a volume of €3 billion.
It expires in March 2021. So far, neither RWE AG nor innogy
have made use of their lines of credit.

• Additional financial headroom for operating activities is
provided by sureties which RWE AG and innogy SE have
been granted by banks. A surety is a security or declaration
of a guarantee by a bank on commission from the customer.
The purpose is to collateralise transactions.

The aforementioned financing instruments do not contain
conditions mandating compliance with specific limits in
terms of leverage or capital structure. Their use is not subject
to a specific rating.

Combined review of operations > Financial position and net worth

RWE Group bonds: maturities/first possible call dates
(as of 31 Dec 2017)

€ billion

2.0

1.5

1.0

0.5

0.0

Year 2018 ’19

’20

’21

’22

’23

’24

’25

’26

’27

’28

’29

’30

’31

’32

’33

’34

’35

’36

’37

’38

’39

’40

’41

’42

’43

Senior bonds innogy SE1

Hybrid bonds RWE AG (first possible call dates)

1 A small residual amount of a senior bond transferred to innogy remained with RWE AG; see commentary in the text.

Immediately after the public listing, we took the necessary
steps to implement the debt transfer externally in relation to
creditors. In early 2017, innogy replaced RWE AG as the
guarantor for the public senior bonds, and in relation to the
private issues, as the debtor. This was preceded by a vote of
the bondholders, which is provided for in such cases by the
German Debt Securities Act. The quorums and majorities
necessary for a change in guarantor and debtor were achieved.
Two senior bonds to which the Act could not be applied
were transferred by a bond swap in December 2016. In one
case, involving a bond with a volume of €500 million maturing
in 2037, a small residual amount remained with RWE AG.
Our two EIB loans were transferred to innogy in July 2017
after receiving creditor approval. On completion of the
debtor exchange, the corresponding intra-group loans were
redeemed or reduced.

innogy takes over the bulk of RWE’s capital market debt.
As part of the Group’s financial reorganisation, innogy assumed
most of RWE AG’s capital market debt. We laid the foundation
for this in the run-up to the IPO of innogy. The debt transfer
was completed in the middle of last year.

In relation to the publicly-traded senior bonds issued by our
former Dutch subsidiary RWE Finance B.V., the transfer was
effected at the end of 2015 when we sold the issuer to a
predecessor of innogy SE. Despite this sale, however, RWE AG
was still the guarantor of the bonds at that point in time. In
relation to the private placements made by RWE AG itself,
the debt was initially transferred only in economic terms. To
do this, internal lending agreements were concluded, in
which the obligations of RWE AG to service the bonds were
mirrored by corresponding payment obligations of innogy
to RWE AG. Loans of €645 million and £350 million from the
European Investment Bank (EIB) were economically allocated
to innogy in the same manner. Above and beyond this, our
subsidiary assumed obligations amounting to €2.9 billion
vis-à-vis RWE AG, which cover the majority of the liabilities
from RWE’s hybrid bonds. The above measures were
completed before innogy was listed on the stock market in
October 2016.

54 RWE Annual Report 2017

Bond volume drops to €14.0 billion. At the end of 2017,
the Group had bonds with a total nominal volume of
an equivalent of €14.0 billion outstanding, compared to
€14.7 billion a year before. The total of 24 issues are
denominated in euros, sterling, US dollars and yen. We
concluded hedges to manage our currency exposure.
Taking such transactions into account, the RWE Group’s debt
broke down into 62 % in euros and 38 % in sterling on the
balance-sheet date. At the end of the year, our senior bonds
outstanding had an average remaining maturity of nine years.

The nominal volume of RWE AG hybrid bonds declined by
€2.0 billion to €1.9 billion. This was mainly because we
redeemed three bonds on the earliest possible date during
the financial year that just ended: these were bonds of
CHF 250 million (5.25 % coupon; redeemed in April),
CHF 150 million (5 %; July) and US$1 billion (7 %; October).
In addition to the redemptions, we bought back hybrid
bonds with a total nominal value equivalent to €585 million
in October of last year. Of this sum, €161 million was
allocable to our €700 million bond (2.75 % coupon; earliest
possible redemption in 2020), €268 million to our €550 million
bond (3.5 %; 2025) and US$183 million to our US$500 million
bond (6.625 %; 2026). This was preceded by a public buyback
offer with a target volume of €550 million on 26 September.
The only hybrid bond of which we did not buy any paper
was the one with a volume of £750 million (7 %; 2019).
The selection of paper bought back was based on yield
considerations, amongst others.

The nominal volume of senior bonds, which are almost fully
allocable to innogy SE, rose by €1.3 billion to €12.1 billion.

This was primarily due to two new issuances: innogy placed a
€750 million senior bond with a tenor of eight years and a
coupon of 1 % in April. This was followed in October by the
company’s first ‘green’ bond, which has a nominal value of
€850 million, a tenor of ten years and a coupon of 1.25 %.
Green bonds are special-purpose financial vehicles, the
issuance proceeds of which may only be used for projects
with a positive effect on the environment. innogy will use
the funds to refinance wind farms in Germany, the United
Kingdom and the Netherlands. These plants are either
under construction or in operation.

Shortly after the end of the reporting year, innogy took
advantage of the favourable interest environment to issue a
further senior bond. At the end of January 2018, the company
placed paper with a nominal volume of €1 billion, a tenor of
eleven-and-a-half years and a coupon of 1.5 %. Proceeds
from this issuance will serve to refinance liabilities that fall
due, among other things.

Significantly lower borrowing costs. In 2017, the cost of
debt for RWE AG was 2.5 %, compared to 4.0 % in the pre-
vious year. This was calculated for the liabilities allocable to
the Group parent from bonds, commercial paper and bank
loans by the end of the year under review. Only hybrid bonds
classified as debt pursuant to International Financial Reporting
Standards were considered. The main reason for the decline
in the cost of capital was that the redemption and buyback
of hybrid bonds eliminated relatively high coupon payments.
innogy calculated a cost of debt as of the balance- sheet date
of 4.1 %, which was stable compared to 2016.

Credit rating of RWE AG (as of 31 Dec 2017)

Moody’s

Standard & Poor’s1

Non-current financial liabilities

Senior debt

Subordinated debt (hybrid bonds)

Current financial liabilities

Outlook

1 At our request, Standard & Poor’s withdrew its RWE rating after the balance-sheet date.

Baa3

Ba2

P–3

Stable

BBB–

A–3

Stable

Fitch

BBB

BB+

Stable

Combined review of operations > Financial position and net worth

Rating agencies confirm RWE’s investment-grade rating.
The factors determining cost of debt also include the
assessment of our creditworthiness by independent rating
agencies. In 2017, the three leading agencies confirmed
their credit ratings for RWE as a result of their regular rating
reviews. In June, Moody’s and Standard & Poor’s announced
that they kept their rating of our long-term creditworthiness
at ‘Baa3’ and ‘BBB –’, respectively. In April, the agency Fitch
confirmed its ‘BBB’ rating of RWE, which is one notch higher.
All three agencies therefore issued an investment-grade rating
for RWE – with a stable outlook. However, Standard & Poor’s
withdrew its RWE rating in February 2018 at our request. As
next to no RWE senior bonds are outstanding due to the

transfer of debt to innogy, we therefore deem the ratings by
Moody‘s and Fitch sufficient.

By contrast, innogy continues to receive credit grades from
all three agencies. They are a notch higher than those for
RWE: innogy has been assigned a rating of ‘Baa2’ (negative
outlook) by Moody’s, ‘BBB’ (stable outlook) by Standard & Poor’s
and ‘BBB+’ (stable outlook) by Fitch. One of the reasons for
the good grades is that innogy has a relatively stable earnings
profile due to its high share of regulated business. The
company provides detailed information on its credit rating
in its 2017 Annual Report.

Cash flow statement
€ million

Funds from operations

Change in working capital

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Effects of changes in foreign exchange rates and other changes in value on cash and cash equivalents

Total net changes in cash and cash equivalents

Cash flows from operating activities

Minus capital expenditure1

Plus proceeds from divestitures/asset disposals1

Free cash flow

1 This item solely relates to items with an effect on cash.

2017

2016

– 1,545

– 209

– 1,754

2,691

– 1,536

– 19

– 618

– 1,754

– 2,580

485

– 3,849

3,013

– 661

2,352

– 4,570

4,282

– 24

2,040

2,352

– 2,308

765

809

+/–
€ million

– 4,558

452

– 4,106

7,261

– 5,818

– 2,658

– 4,106

– 272

– 280

– 4,658

Operating cash flows: significant decline due to contribution
to the German nuclear energy fund. In the year under
review, the RWE Group recorded negative cash flows from
operating activities amounting to – €1,754 million (previous
year: €2,352 million). The endowment of the German nuclear
energy fund curtailed our liquidity by about €7 billion (see
page 35). Excluding this, operating cash flows improved
substantially compared to 2016. One reason for this is the
reimbursement of the €1.7 billion in nuclear fuel tax paid
from 2011 to 2016.

Investing activities led to cash flows of €2,691 million. In the
year being reviewed, we liquidated a large volume of current
securities and short-term cash investments in order to finance
the contribution to the nuclear energy fund. Our capital
expenditure on property, plant and equipment and financial
assets had a counteracting effect. In the prior year, cash
outflows from investing activities totalled €4,570 million, in
part owing to significant purchases of securities, which we
had funded using proceeds from the IPO of innogy.

56 RWE Annual Report 2017

Cash flows from financing activities amounted to – €1,536 million
as opposed to the high cash flows of €4,282 million in 2016
resulting from the public listing of innogy. In the reporting
year, €4.9 billion in financial liabilities were redeemed,
contrasted by a total of €4.0 billion in refinancing. Additional
outflows resulted from a total of €603 million in dividends
paid to co-owners of fully consolidated RWE companies and
hybrid capital investors, €206 million of which was allocable
to dividends paid by innogy to its minority shareholders.

On balance, the presented cash flows from operating,
investing and financing activities caused our cash and cash
equivalents to decline by €618 million.

The high level of cash outflows resulting from the payment
made into the nuclear energy fund also characterised
the development of free cash flow, which amounted to
– €3,849 million (previous year: €809 million). Since 2017
we are using a new definition of free cash flow: it now
includes spending on financial assets and proceeds from
divestments and asset disposals. The year-earlier figure was
adjusted accordingly.

Lower net debt thanks to nuclear fuel tax refund. As of
31 December 2017, our net debt amounted to €20.2 billion,
down €2.5 billion compared to 2016. We had anticipated a
stable level. The decline is partially due to the reimbursement
of the nuclear fuel tax, which was not foreseeable when we
issued the forecast at the beginning of 2017. Furthermore,
provisions for pensions decreased by €1.3 billion. The
background to this is that the plan assets, with which we
cover most of our pension obligations, increased due to
positive market developments. Moreover, we raised the
discount rates used to calculate the net present value of
the German pension obligations. The new rates average 2.0 %
throughout the Group as opposed to 1.8 % in the 2016
financial statements and reflect the most recent development
of market interest rates. Besides the aforementioned factors,
divestments also contributed to the drop in debt, whereas
investing activities and our dividend payments had a counter-
acting effect. The contribution to the nuclear energy fund
did not have an impact on the level of net debt, because our
nuclear energy provisions declined by the same amount.

Net debt
€ million

Cash and cash equivalents

Marketable securities

Other financial assets

Financial assets

Bonds, other notes payable, bank debt, commercial paper

Hedge transactions related to bonds

Other financial liabilities

Financial liabilities

Net financial debt

Provisions for pensions and similar obligations

Surplus of plan assets over benefit obligations

Provisions for nuclear waste management

Mining provisions

Provisions for dismantling wind farms

Adjustment for hybrid capital

Plus 50 % of the hybrid capital stated as equity

Minus 50 % of the hybrid capital stated as debt

Net debt

31 Dec 2017

31 Dec 2016

+/–
€ million

3,933

5,131

1,863

10,927

15,099

2,102

17,228

6,301

5,420

– 103

6,005

2,322

359

– 77

470

– 547

20,227

4,576

10,065

1,621

16,262

15,921

– 263

2,263

17,921

1,659

6,761

– 29

12,699

2,363

334

– 1,078

471

– 1,549

22,709

– 643

– 4,934

242

– 5,335

– 822

290

– 161

– 693

4,642

– 1,341

– 74

– 6,694

– 41

1,001

– 1

1,002

– 2,482

Combined review of operations > Financial position and net worth

Stable off-balance-sheet obligations from electricity and
commodity purchases. Net debt does not include our
off-balance-sheet obligations, which largely stem from
long-term fuel and electricity purchase agreements. As of
the balance-sheet date, payment obligations from material
procurement contracts amounted to €26.2 billion for fuel
(previous year: €26.0 billion) and €7.1 billion for electricity
(previous year: €7.4 billion). These figures are based on
assumptions regarding the prospective development
of commodity prices. For further commentary on our
off-balance-sheet obligations, please see page 144 et seq.
in the Notes.

Equity ratio rises to 17.4 %. As of the cut-off date for the
financial statements, the RWE Group had a balance-sheet
total of €69.1 billion. This was €7.3 billion less than in the
preceding year, primarily due to the payment made into the
nuclear energy fund. Our contribution of roughly €7 billion
was stated as part of current provisions on the previous
year’s balance sheet. Therefore, they dropped considerably.
At the same time, cash outflows reduced current assets. The
decrease in the balance-sheet total was also driven by a
decline in derivatives, which fell by €2.2 billion on the assets
side of the balance sheet and by €1.4 billion on the equity
and liabilities side. By contrast, the refund of the nuclear
fuel tax by the government extended the balance sheet.
Due, among other things, to the last factor mentioned, the
RWE Group’s equity rose by €4.0 billion to €12.0 billion. Its
share in the balance-sheet total (equity ratio) was 17.4 %, up
6.9 percentage points on the previous year’s level.

Group balance sheet structure

Assets

Non-current assets

of which:

Intangible assets

Property, plant and equipment

Current assets

of which:

Receivables and other assets1

Assets held for sale

Total

Equity and liabilities

Equity

Non-current liabilities

of which:

Provisions

Financial liabilities

Current liabilities

of which:

Provisions

Other liabilities2

Liabilities held for sale

Total

1 Including financial accounts receivable, trade accounts receivable and income tax refund claims.
2 Including trade accounts payable and income tax liabilities.

31 Dec 2017

31 Dec 2016

€ million

45,694

66.2

45,911

12,383

24,904

23,365

12,487

128

69,059

11,991

36,774

19,249

14,414

20,294

5,137

12,259

111

69,059

17.9

36.1

33.8

18.1

0.2

100.0

17.4

53.3

27.9

20.9

29.3

7.4

17.8

0.2

100.0

12,749

24,455

30,491

14,122

–

76,402

7,990

39,646

20,686

16,041

28,766

12,175

14,449

–

76,402

60.1

16.7

32.0

39.9

18.5

–

100.0

10.5

51.9

27.1

21.0

37.6

15.9

18.9

–

100.0

58 RWE Annual Report 2017

1.8 NOTES TO THE FINANCIAL STATEMENTS OF RWE AG

(HOLDING COMPANY)

The financial statements of RWE AG reflect significantly improved earnings. After recording losses due to significant
impairments recognised for power plants in 2016, we posted a net profit of €1.4 billion in the year under review. The
refund of the nuclear fuel tax by the government contributed to this. It was also one of the reasons why RWE AG’s
equity ratio improved by 7.7 percentage points to 17.9 %.

Financial statements. RWE AG prepares its financial
statements in compliance with the rules set out in the German
Commercial Code and the German Stock Corporation Act.
The financial statements are submitted to Bundesanzeiger

Verlag GmbH, located in Cologne, Germany, which publishes
them in the Federal Gazette. The financial statements
of RWE AG can be ordered directly from us and are also
available on the internet at www.rwe.com/reports.

Balance sheet of RWE AG (abridged)
€ million

Assets

Financial assets

Accounts receivable from affiliated companies

Other accounts receivable and other assets

Marketable securities and cash and cash equivalents

Total assets

Equity and liabilities

Equity

Provisions

Accounts payable to affiliated companies

Other liabilities

Total equity and liabilities

Income statement of RWE AG (abridged)
€ million

Income from financial assets

Net interest

Other income and expenses

Taxes on income

Net profit/net loss

Transfer to other retained earnings (previous year: withdrawal)

Distributable profit

31 Dec 2017

31 Dec 2016

24,901

4,811

505

3,951

34,168

6,104

2,368

22,623

3,073

34,168

32,115

8,218

753

4,887

45,973

4,697

2,419

32,136

6,721

45,973

2017

2016

2,268

− 339

− 345

− 172

1,412

− 490

922

− 1,240

− 368

1,176

− 569

− 1,001

1,006

Combined review of operations > Notes to the financial statements of RWE AG (holding company)

Assets. RWE AG had €34.2 billion in total assets as of
31 December 2017. This represents a decline of €11.8 billion
compared to the previous year. Accounts receivable from
and payable to affiliated companies dropped considerably.
One reason for this was that innogy assumed the capital
market debt of RWE AG in 2017 and that the corresponding
intra-group loans were redeemed or reduced with effect
from the debtor exchange (see page 53). Furthermore, a
dividend claim vis-à-vis RWE Downstream Beteiligungs GmbH
that arose in 2016 ceased to exist because the company,
which holds our 76.8 % stake in innogy, made a corresponding
dividend payment to RWE AG in the year under review. The
decline in total assets is also due to the fact that RWE AG
sold securities held as current and non-current assets. We
used the proceeds to redeem a loan granted us by RWE Power
and to offset the loss incurred by that company in the
preceding year. As of 31 December 2017, RWE AG’s equity
ratio was 17.9 %, which was much higher than in the prior
year (10.2 %). In addition to the aforementioned effects, the
net profit we posted in 2017 also came to bear.

Financial position. RWE AG is set up solidly in financial terms
and has a number of flexible financing tools at its disposal.
Leading rating agencies certify our high creditworthiness.
A detailed presentation of RWE’s financial position and
financing activity in the year under review has been made on
page 52 et seqq.

Earnings position. In 2017, RWE AG’s earnings position
improved significantly compared to the previous year, which
was characterised by substantial one-off burdens.

Income from financial assets rose by €3,508 million to
€2,268 million. Following the power plant impairments
recognised in 2016, RWE’s two large generation companies
returned to profitability in the reporting year. RWE Power
benefited from the nuclear fuel tax refund, while
RWE Generation profited from the successful commercial
optimisation of power plant deployment among other things.

Net interest improved by €29 million to –€339 million. Our
reduction in the volume of hybrid bonds outstanding last
year through redemptions and buybacks resulting in less
spend on financing came to bear here.

The net amount from other income and expenses decreased
by €1,521 million to –€345 million in part due to the
non- recurrence of positive one-off effects seen in the prior
year: in 2016, the reorganisation of the RWE Group had
revealed hidden reserves in the investments.

With a tax expense of €172 million (previous year: €569 million),
RWE AG achieved a net profit of €1,412 million in fiscal 2017
after the loss of €1,001 million recorded in the preceding
year. We also expect a net profit in the 2018 financial year,
albeit lower than in 2017.

The distributable profit of €922 million reflects the planned
dividend payment to our shareholders: the Supervisory and
Executive Boards of RWE AG will propose to the Annual
General Meeting on 26 April 2018 that a dividend of €1.50
be paid per common and preferred share for fiscal 2017.
The sum is made up of the regular dividend of €0.50 and a
special payment of €1.00 with which RWE shareholders
are to partake of the nuclear fuel tax refund.

Corporate governance declaration in accordance with
Section 289f and Section 315d of the German Commercial
Code. On 15 February 2018, the Executive Board of RWE AG
issued a corporate governance statement in accordance with
Section 289f and Section 315d of the German Commercial
Code and published it on the internet at
www.rwe.com/corporate-governance-declaration.

60 RWE Annual Report 2017

1.9 PRESENTATION OF THE RWE GROUP WITH INNOGY

AS A PURE FINANCIAL INVESTMENT

Since the public listing of our subsidiary innogy on the stock exchange, we have been managing it as a pure financial
investment. A comprehensive agreement ensures that the company can conduct its business operations independently.
Accordingly, when developing the planning for the RWE Group, we also consider Group figures in which innogy is not
included as a fully consolidated company, but instead at the investment’s fair value plus the dividend payment. In
this chapter, we present some of these non-IFRS figures and explain how we calculated them.

Full consolidation only reflects the status of the investment
in innogy to a limited extent. Pursuant to International
Financial Reporting Standards (IFRS) we must include
companies that are indirectly or directly controlled by RWE AG
in the Group’s financial statements on a fully consolidated
basis. This means that the income, expenses, cash flows, assets,
liabilities, etc. of these activities are considered in the Group
figures. innogy is fully consolidated in the Group’s financial
statements, as we hold a majority stake of 76.8 % in the
company. However, this representation only partially reflects
the manner in which we manage our subsidiary. For us,
innogy has the status of a pure financial investment, which
we expect to deliver an attractive, reliable dividend. This is
set out in a comprehensive agreement which stipulates that
our subsidiary can act independently in business matters and
that RWE AG may only exercise its influence as the majority
owner by way of the legally mandated bodies, i. e. the Super-
visory Board and the Annual General Meeting.

Adjusted figures. For planning purposes, we adopt a
presentation that does not conform with IFRS and deviates
from the principle of full consolidation. This involves
assigning innogy to the ‘other financial assets’ line item on
the balance sheet. The figure stated is calculated by
multiplying the number of shares we hold in innogy with the
share price on the stock market as of the cut-off date for the
financial statements.

Key figures for the RWE Group including innogy
as a financial investment that is not fully consolidated1
€ million

Adjusted EBITDA

Adjusted EBIT

Income before tax

Net income

Adjusted net income

Net financial debt

Net debt

Adjusted EBITDA for 2017 only includes innogy’s dividend
payment of €683 million, whereas for adjusted EBITDA in
2016, innogy was considered based on the contribution of
its companies to the RWE Group’s income from investments
and income from investments accounted for using the equity
method, which totalled €730 million. innogy no longer has
a direct effect on the RWE Group’s non-operating result or
financial result. However, RWE’s figures are modified further,
as we treat business transactions between the rest of the
Group and innogy as transactions with third parties.

Adjusted EBITDA better than expected. The following is
an overview of some key financial indicators calculated
applying the aforementioned method. These figures trend in
the same direction as they would if innogy were fully
consolidated. At €2,066 million, adjusted EBITDA slightly
exceeded our expectations, rising by 7 % compared to 2016.
Adjusted net income amounted to €973 million, which is at
the upper end of the range which we had forecast, after
having been slightly negative in 2016 (– €20 million). We also
displayed positive development regarding net debt: it
dropped by 34 % to €4,510 million, primarily due to the
nuclear fuel tax refund.

2017

2016

2,066

1,474

2,320

2,160

973

– 6,070

4,510

1,928

1,077

– 5,795

– 5,807

–20

– 9,999

6,858

+/–
%

7.2

36.9

140.0

137.2

–

39.3

–34.2

1 Figures not calculated according to IFRS. In addition to recognising innogy as a financial investment, this relates to the following items: supply and service agreements of the

rest of the Group with innogy have all been accounted for as executory contracts, although they would have had to be measured at fair value according to IAS 39. We have not
formed provisions for contingent losses from these transactions. Figures for supply and service relationships with external third parties and associated provisions have been
accounted for as in the IFRS consolidated financial statements. The same applies to the accounting effects of hedges and deferred taxes.

Combined review of operations > Disclosure relating to German takeover law

1.10 DISCLOSURE RELATING TO GERMAN TAKEOVER LAW

The following disclosure is in accordance with Section 315a, Paragraph 1 and Section 289a, Paragraph 1 of the German
Commercial Code as well as with Section 176, Paragraph 1, Sentence 1 of the German Stock Corporation Act. The
information relates to company-specific regulations for example adjustments to the capital structure by the Executive
Board and in the event of a change of control of the company. At RWE, these provisions are in line with the standards
of German listed companies.

Composition of subscribed capital. RWE AG’s subscribed
capital consists of 575,745,499 no-par-value common shares
and 39,000,000 no-par-value preferred shares without
voting rights, each in the name of the bearer. They account
for 93.7 % and 6.3 % of the subscribed capital, respectively.
Holders of preferred shares are given priority when
distributable profit is distributed. Pursuant to the Articles of
Incorporation, it is appropriated in the following order:

1) to make any back payments on shares of the profit
allocable to preferred shares from preceding years;

2) to pay a preferred share of the profit of €0.13 per

preferred share;

3) to pay the share of the profit allocable to common shares

of up to €0.13 per common share; and

4) to make equal payments of potential further portions of
the profit allocable to common and preferred shares,
unless the Annual General Meeting decides in favour of a
different appropriation.

The composition of the subscribed capital and the rights and
obligations of the shareholders comply with the requirements
of the law and the Articles of Incorporation.

Shares in capital accounting for more than 10 % of voting
rights. As of 31 December 2017, no holding in RWE AG
exceeded 10 % of the voting rights. In the middle of the
year, RWEB GmbH had informed us that its share of the
voting rights had fallen from 14.18 % to 2.70 %.

Limitation of share transfers. Within the scope of the
employee share plan of RWE AG, 340,920 RWE common shares
were issued to employees in the financial year that just ended.
These securities must be held until 31 December 2018.

Corporation Act in conjunction with Article 16, Paragraph 6
of the Articles of Incorporation of RWE AG. According to
the aforementioned provision in the Articles of Incorporation,
unless otherwise required by law or the Articles of
Incorporation, the Annual General Meeting shall adopt all
resolutions by a simple majority of the votes cast or – if a
capital majority is required – by the simple majority of the
capital stock represented when the resolution is passed.
Pursuant to Article 10, Paragraph 9 of the Articles of
Incorporation, the Supervisory Board is authorised to pass
resolutions to amend the Articles of Incorporation that
only concern the wording without changing the content.

Executive Board authorisations for implementing share
buybacks. Pursuant to a resolution passed by the Annual
General Meeting on 16 April 2014, RWE AG is authorised to
buy back up to 10 % of its capital stock as of the entry
into force of said resolution or – if this figure is lower – at the
exercise of this authorisation in shares of any kind until
15 April 2019. At the Executive Board’s discretion, the
acquisition shall be made on the stock exchange or via a
public purchase offer.

Shares purchased in this way may then be cancelled.
Furthermore, the purchased shares may be transferred to third
parties or sold otherwise in connection with mergers or
acquisitions of companies, parts of companies, operations,
or of stakes in companies. Shares that are not sold on the
stock exchange or through a tender to all shareholders may
only be sold for cash. Moreover, in such cases, the sale price
may not be significantly lower than the price at which the
shares are listed on the stock market. The company may
transfer shares bought back to the holders of option or
convertible bonds. The company may also use the shares to
fulfil its obligations resulting from employee share schemes.
In the aforementioned cases, shareholder subscription rights
are waived. These authorisations may be exercised in full or
in part, or once or several times for partial amounts.

Appointment and dismissal of Executive Board members /
amendments to the Articles of Incorporation. Executive
Board members are appointed and dismissed in accordance
with Section 84 et seq. of the German Stock Corporation Act
in conjunction with Section 31 of the German Co-Determination
Act. Amendments to the Articles of Incorporation are made
pursuant to Section 179 et seqq. of the German Stock

Executive Board authorisation for the issuance of new
shares. Pursuant to the resolution passed by the Annual
General Meeting on 16 April 2014, the Executive Board is
authorised to increase the company’s capital stock, subject
to the Supervisory Board’s approval, by up to €314,749,693.44
until 15 April 2019, through the issuance of up to 122,949,099

62 RWE Annual Report 2017

new bearer common shares in return for contributions in
cash or in kind (authorised capital). These authorisations
may be exercised in full or in part, or once or several times
for partial amounts.

In principle, shareholders are entitled to subscription rights.
However, subject to the approval of the Supervisory Board,
the Executive Board may waive such rights in the following
cases: they may be waived in order to prevent the number of
shares allocated from the subscription resulting in fractional
amounts (fractions of shares). Subscription rights may
also be waived in order to issue shares in exchange for
contributions in kind for the purposes of mergers or
acquisitions of companies, parts of companies, operations,
or of stakes in companies. Subscription rights may be waived
in the event of a cash capital increase if the price at which
the new shares are issued is not significantly lower than the
price at which shares are quoted on the stock market and
the portion of the capital stock accounted for by the new
shares, for which subscription rights are waived, does not
exceed 10 % in total. Furthermore, subscription rights may
be waived in order to offer shares to potential holders of
convertible or option bonds commensurate to the rights to
which they would be entitled as shareholders on conversion
of the bond or on exercise of the option.

The Executive Board is authorised, subject to the approval
of the Supervisory Board, to determine the further details
and conditions of the share issuance.

In sum, the capital stock may not be increased by more
than 20 % through the issuance of new shares waiving
subscription rights.

Effects of a change of control on debt financing. Our
debt financing instruments often contain clauses that take
effect in the event of a change of control. The following rule
applies to a residual amount of a senior bond remaining with
RWE AG after the transfer of debt to innogy (see page 53): in
the event of a change of control in conjunction with a drop
in RWE AG’s credit rating below investment-grade status,
creditors may demand immediate redemption. In such cases,
RWE AG has the right to cancel its subordinated hybrid
bonds within the defined change of control period; if this
does not occur, the annual compensation payable on the
hybrid bonds increases by 500 basis points.

RWE AG’s €3 billion syndicated credit line also includes a
change-of-control clause, which essentially has the following
content: in the event of a change of control or majority at
RWE, further drawings are suspended until further notice.
The lenders shall enter into negotiations with us on a
continuation of the credit line. Should we fail to reach an
agreement with the majority of them within 30 days from such
a change of control, the lenders may cancel the line of credit.

Effects of a change of control on Executive Board and
executive compensation. Members of the Executive Board of
RWE AG have the special right to terminate their employment
contract in the event that shareholders or third parties obtain
control over the company and this would be linked to
significant disadvantages for the Executive Board members
in question. In such a case, they may resign from their
position within six months of the change of control with
cause by giving three months’ notice and request the
termination of their employment contract and receive a
one-off payment.

The amount of the one-off payment shall correspond to
all compensation due until the end of the contractually
agreed term of service, but no more than three times the
total contractual annual compensation. Share-based
compensation is not included in this. This is in line with the
currently valid recommendations of the German Corporate
Governance Code.

In the new Strategic Performance Plan presented on page 66
et seq., it is stipulated for the Executive Board and executives of
RWE AG and subordinated associated companies that in the
event of a change of control the granted performance shares
which have already been finally determined but not yet been
paid out, shall be paid out early. The pay-out amount shall
correspond to the number of performance shares multiplied
by the sum of the average closing price of the RWE
common share over the last 30 trading days prior to the
announcement of the change of control and the amount
of dividend paid out per share up to that point in time,
calculated starting from the time when the final number of
performance shares was fully granted. All conditionally
granted performance shares at the time of the change of
control shall expire without replacement or compensation.

Combined review of operations > Compensation report

1.11 COMPENSATION REPORT

We believe that performance-oriented and transparent supervisory and management board compensation is a key
element of good corporate governance. In this chapter, we have provided information on the structure and level of
the compensation of the Supervisory Board and Executive Board of RWE AG. In addition to the requirements of
German stock corporation and commercial law, we also consider the recommendations of the German Corporate
Governance Code concerning the design and presentation of compensation systems.

Structure of Supervisory Board compensation

The remuneration of the Supervisory Board is governed by
the provisions of the Articles of Incorporation of RWE AG.
Accordingly, the Chairman of the Supervisory Board receives
fixed compensation of €300,000 per fiscal year. Their
Deputy receives €200,000 per fiscal year. The other members
of the Supervisory Board receive fixed compensation of
€100,000 and additional remuneration for committee
mandates according to the following rules.

Members of the Audit Committee receive additional
remuneration of €40,000. This additional payment is
increased to €80,000 for the Chair of this committee. With
the exception of the Nomination Committee, the members
and the Chairs of all the other Supervisory Board committees
receive an additional €20,000 and €40,000 in compensation,
respectively. Remuneration for a committee mandate is only
paid if the committee is active at least once in the fiscal year.

In addition to the remuneration paid, out-of-pocket expenses
are refunded to the members of the Supervisory Board.
Supervisory Board members also receive income from the
exercise of Supervisory Board mandates at subsidiaries of
RWE AG.

The members of the Supervisory Board imposed on themselves
the obligation, subject to any obligations to relinquish their
pay, to use 25 % of the total compensation paid (before taxes)
to buy RWE shares and to hold them for the duration of their
membership of the Supervisory Board of RWE AG. Last year,
all of the members who do not donate their compensation
met this self-imposed obligation for their compensation for
2016. For the new members elected to the Board in April
2017, this self-imposed obligation will apply to the
compensation for fiscal 2017, which was paid out at the
start of fiscal 2018.

Supervisory Board members who concurrently hold several
offices in this body only receive compensation for the
highest- paid position. Compensation is prorated if a Supervisory
Board member only performs a function for part of a fiscal year.

Level of Supervisory Board compensation

In total, the remuneration of the Supervisory Board (including
compensation for committee mandates at subsidiaries, but
excluding out-of-pocket expenses) amounted to €3,637,000
in fiscal 2017 (previous year: €3,228,000). Of this sum,
€459,000 (previous year: €442,000) was remuneration paid
for mandates on committees of the Supervisory Board and

€877,000 (previous year: €482,000) was remuneration paid
for mandates at subsidiaries. The rise in compensation
for the exercise of mandates is due in part to the fact that
certain individuals also belong to the Supervisory Board of
innogy SE and that they only received prorated compensation
for the exercise of this mandate in 2016.

64 RWE Annual Report 2017

The remuneration of all individuals who have served on the
Supervisory Board in 2016 and/or 2017 is shown in the
following table.

Supervisory Board compensation1

Fixed compensation

Compensation for
committee offices

Compensation for
mandates at subsidiaries2

Total compensation3

€ ‘000

Dr. Werner Brandt, Chairman

Dr. Manfred Schneider, Chairman
(until 20 April 2016)

Frank Bsirske, Deputy Chairman

Reiner Böhle

Sandra Bossemeyer

Dieter Faust (until 20 April 2016)

Ute Gerbaulet (since 27 April 2017)

Reinhold Gispert (since 27 April 2017)

Roger Graef (until 20 April 2016)

Arno Hahn (until 27 April 2017)

Andreas Henrich

Maria van der Hoeven
(20 April 2016 until 14 October 2016)

Manfred Holz (until 20 April 2016)

Prof. Dr. Hans-Peter Keitel

Dr. h. c. Monika Kircher

Martina Koederitz
(20 April 2016 until 27 April 2017)

Monika Krebber

Frithjof Kühn (until 20 April 2016)

Hans Peter Lafos (until 20 April 2016)

Harald Louis

Christine Merkamp (until 20 April 2016)

Dagmar Mühlenfeld

Peter Ottmann

Günther Schartz

Dr. Erhard Schipporeit

Dagmar Schmeer (until 20 April 2016)

Prof. Dr.-Ing. Ekkehard D. Schulz
(until 20 April 2016)

Dr. Wolfgang Schüssel

Ullrich Sierau

Ralf Sikorski

Marion Weckes

Dr. Dieter Zetsche (until 20 April 2016)

Leonhard Zubrowski

Total3

2017

300

2016

240

–

200

100

–

100

–

100

–

100

–

100

–

100

–

100

200

100

–

100

2017

2016

–

2,301

2,303

459

442

2017

300

2016

130

2017

600

2016

393

–

200

120

–

877

–

482

–

400

240

120

–

108

–

100

–

120

100

187

–

160

–

120

180

–

140

190

140

–

150

286

168

–

194

120

103

120

126

134

140

190

150

3,637

3,228

1 Supervisory Board members who joined or retired from the corporate body during the year receive prorated compensation.
2 Compensation for exercising mandates at subsidiaries is only included for periods of membership of the Supervisory Board of RWE AG.
3 The commercial rounding of certain figures can result in inaccurate sums.

Combined review of operations > Compensation report

Structure of Executive Board compensation

Principles of Executive Board compensation. The structure
and level of the Executive Board’s remuneration are determined
by the Supervisory Board of RWE AG and reviewed on a regular
basis to determine whether they are appropriate and in line
with the market. The compensation system described in the
following has been applied since 1 October 2016. It ensures
that remuneration reflects individual performance, company
performance and the development of the RWE share over
the long term.

Executive Board compensation is composed of non-performance-
based and performance-based components. The former
consists of the fixed salary, the pension instalment as well as
fringe benefits. The performance-based components include
the bonus and a share-based payment, the latter of which is
a long-term compensation component.

Recipients of Executive Board compensation. In the financial
year that just ended, Rolf Martin Schmitz, Markus Krebber
and Uwe Tigges received compensation for their work on
the Executive Board of RWE AG. Rolf Martin Schmitz has
been a member of the Executive Board since 1 May 2009
and its Chairman since 15 October 2016. Markus Krebber
was appointed to the corporate body with effect from
1 October 2016 and has been in charge of finance since
15 October 2016. Uwe Tigges belonged to the Executive
Board from 1 April 2013 to 30 April 2017. He was in charge
of human resources and was the Labour Director. He resigned
from his office in order to focus on his work on the Executive
Board of innogy SE, which he joined on 1 April 2016. As of
1 May 2017, his tasks on the Executive Board of RWE AG were
transferred to Rolf Martin Schmitz, who has since also been
the company’s Labour Director.

All of the members of the Executive Board entered into
employment contracts based on the current compensation
system with effect from 1 October 2016. Uwe Tigges, who
belonged to the Executive Boards of RWE AG and innogy SE
at the time, received his contract from innogy SE.

Non-performance-based Executive
Board compensation

Fixed compensation and pension instalments. All Executive
Board members receive a fixed salary, which is paid in
twelve monthly instalments. As a second fixed compensation
component, members of the Executive Board are entitled
to a pension instalment for every year of service, which is
determined on an individual basis. The pension instalment
is paid in cash or retained in part or in full in exchange for
a pension commitment of equal value through a gross
compensation conversion. RWE has concluded a reinsurance
policy to finance the pension commitment. The accumulated
capital may be drawn upon on retirement, but not before
the Executive Board member turns 62. Members of the
Executive Board of RWE reach the established age limit
when they are 63 years old. They can be reappointed for one
year at a time thereafter, but may not hold office beyond
their 65th birthday.

When retiring, Executive Board members can choose between
a one-time payment and a maximum of nine instalments.
They and their surviving dependants do not receive any further
benefits. Vested retirement benefits from earlier activities
within the RWE Group remain unaffected by this. The vested
retirement benefits acquired by Uwe Tigges were transferred
from RWE AG to innogy SE upon termination of his employment
contract.

A different rule applies to Rolf Martin Schmitz, who was
appointed to the Executive Board before the pension
instalments were introduced. He was granted a pension
benefit, which remains.

Fringe benefits. Non-performance-based compensation
components also include fringe benefits, primarily consisting
of the use of company cars and accident insurance premiums.

66 RWE Annual Report 2017

Performance-based Executive Board
compensation

Bonus. Executive Board members receive a bonus, which is
based on the economic performance of the company and
the degree to which they achieve their individual goals and
the collective goals of the Executive Board. The starting
point for calculating the bonus is what is referred to as the
‘company bonus’, which depends on the level of adjusted
EBIT and is determined as follows.

Share-based payment. Executive Board members are granted
a share-based payment according to RWE AG’s Strategic
Performance Plan (SPP). The SPP rewards the achievement
of long-term goals. The key determinants of its success are
the level of adjusted net income and the performance of
the RWE common share (return on share price development
and dividend) over a period of several years. By linking
compensation to the development of the share price over the
long term, the SPP motivates the Executive Board to consider
the interests of the company’s owners when taking decisions.

The Supervisory Board sets a target for adjusted EBIT at the
beginning of every fiscal year. After the end of the fiscal
year, the actual level of adjusted EBIT achieved is compared
with the target figure. If the figures are identical, the target
achievement is 100 %. In this case, the company bonus
equals the contractually agreed baseline bonus. If adjusted
EBIT is more or less than the established target, target
achievement increases or decreases by a factor of 2.5. If
adjusted EBIT is exactly 120 % of the target figure, the target
achievement amounts to 150 %. The latter figure is also the
cap, which cannot be exceeded even if adjusted EBIT is higher.
The lower limit is reached if adjusted EBIT is exactly 80 % of
the target figure. In this case, the target achievement for the
company bonus amounts to 50 %. If the EBIT figure is lower
than the 80 % threshold, no company bonus is paid out.

The performance of individual Executive Board members is
considered by multiplying the company bonus by a performance
factor. It may vary between 0.8 and 1.2. The value achieved
depends on the following criteria, each of which is weighted
by one-third: (1) achievement of the individual targets,
(2) collective performance of the Executive Board, and (3)
performance in corporate responsibility (CR) and employee
motivation. Success in CR depends on the achievement of
environmental and social goals and is documented in our
sustainability reporting. Employee motivation is measured
with a motivation index, which is based on anonymous
surveys of employee commitment and satisfaction.

After the end of every financial year, the Supervisory Board
evaluates the individual performance of the Executive Board
members relative to the above three criteria and determines
their individual performance factor. This is done in line with
the binding goals and targets which it sets at the beginning
of the financial year. The bonus determined in this manner is
paid out in full to the Executive Board members after the end
of the fiscal year.

The SPP is based on conditionally granted performance shares.
Performance shares are granted as of 1 January of every
fiscal year. The SPP’s conditions envisage a transitional
tranche in fiscal 2016 (year of introduction) and three more
regular tranches for 2017, 2018 and 2019. The Executive
Board members receive a grant letter for each tranche. The
– preliminary – number of performance shares is calculated
based on the gross grant amount mentioned in the grant
letter by dividing the grant amount by the average closing
quotation of the RWE share on the last 30 days of trading on
Xetra before the grant.

The granted performance shares have a term of four years
(vesting period). After the end of the first year, the number of
fully granted performance shares is determined. It depends
on the adjusted net income achieved by the RWE Group for
the year. The actual figure is compared to a pre-defined target
figure. Determining this target figure is the responsibility of
the Supervisory Board, which orientates itself towards the
approved medium-term plan in doing so. If the target figure
is achieved exactly, 100 % of the conditionally granted
performance shares of the tranche is fully allocated. If the
target figure is exceeded, the final grant is more than 100 %
and vice-versa. Similar to determining the company bonus,
there is an upper limit and a lower limit. If adjusted net
income reaches or exceeds the upper threshold, 150 % of the
conditionally granted performance shares is fully vested. If it
is at the lower threshold, the final grant amounts to 50 %. If
the actual figure is lower than the threshold, all of the
conditionally granted performance shares from the tranche
lapse. This means that the final number of performance
shares can vary from 0 % to 150 % of the conditionally granted
performance shares.

Combined review of operations > Compensation report

The fully vested performance shares are fully paid out in
cash to the member of the Executive Board after the end
of the four-year vesting period. The level of the payment
depends on the performance of the RWE common share. It
corresponds to the finalised number of performance shares
multiplied by the average closing quotation of the RWE share
of the last 30 days of trading on Xetra before the end of
the vesting period added to the cumulative dividend paid
during the holding period. However, a cap applies in this
case as well: even in the event of extremely good share
performance, the payment is limited to a maximum of 200 %
of the initial gross grant amount.

The performance shares remain unaffected after an Executive
Board member leaves the body at the end of his or her contract
and are paid out as planned at the end of the four-year
vesting period. If an Executive Board member voluntarily
leaves the company early or is dismissed with good cause,
all performance shares which have not yet reached the end
of the plan’s duration lapse. The SPP also contains a demerit
provision. This empowers the Supervisory Board to punish
infractions by Executive Board members, for example for
serious violations of the company’s Code of Conduct, by
reducing or completely voiding ongoing SPP tranches.

The members of the Executive Board are obligated to reinvest
25 % of the payment (after taxes) in RWE shares. The
shares must be held until at least the end of the third year
after conclusion of the vesting period.

Compensation for exercising mandates. During the past
fiscal year, members of the RWE AG Executive Board were
paid to exercise supervisory board mandates at affiliates. This
income is deducted from the bonus and therefore does not
increase the total remuneration.

Upon introduction of the SPP in October 2016, the Executive
Board members were granted share-based payments
retroactively and in full for 2016, the transitional year. With
regard to the introductory 2016 tranche, the final number of
performance shares depends on the level of adjusted net
income in 2017 and its relation to the target figure for 2017.
This solution was chosen because, upon being granted in
October 2016, it no longer made sense to establish a 2016
target figure for adjusted net income.

Shares of total compensation accounted for by the
individual components. Assuming that both the company
and the Executive Board members achieve their performance
targets to a degree of 100 %, the compensation structure
roughly breaks down as follows: the base salary accounts for
around 30 % of total remuneration. Approximately 30 % is
allocable to short-term variable compensation, i.e. the bonus.
As a long-term compensation component, the SPP accounts
for about 40 % of total remuneration.

In 2016, the Supervisory Board established target figures
for adjusted net income for the planned SPP tranches
(2016 to 2019). As part of this, the aforementioned upper
and lower thresholds were also determined. The Supervisory
Board is only able to subsequently adjust these figures to
a very limited degree and only in predefined situations, in
order to be able to take into account the effects of capital
measures, acquisitions, disposals or regulatory changes
which were not known or foreseeable when the target
figures were determined. RWE AG therefore complies
with the recommendations of the German Corporate
Governance Code (GCGC), in that – as a rule – changes to
the performance targets or comparison parameters should
not be subsequently made.

Limitation of Executive Board compensation. As set out
earlier, the level of variable compensation components is
limited. The company bonus amounts to a maximum of
150 % of the contractually agreed bonus budget. Multiplying
this by the individual performance factor (0.8 to 1.2), it is
possible to reach a maximum of 180 % of the bonus budget.
With regard to share-based payment under the SPP, payout
of the performance shares after the completion of the vesting
period is limited to a maximum of 200 % of the grant budget.
Based on the above maximum values, a cap can also be
derived for the total compensation (see the diagram overleaf).

68 RWE Annual Report 2017

Range of Executive Board compensation

Budget: 100 %

Strategic
Performance
Plan (100 %)

Bonus
(100 %)

40 %

30 %

Floor: 30 %

Cap: 164 %

Strategic
Performance
Plan
(Maximum: 200 %)

80 %

Bonus
(Maximum: 180 %)

54 %

Fixed salary

30 %

Fixed salary

30 %

Fixed salary

30 %

Payment dates. Executive Board members receive their fixed
salary in twelve monthly instalments. The pension instalment
is paid out at the end of the year, insofar as it is not converted
into a pension commitment. After the fiscal year, the
Supervisory Board determines the target achievement for the
company bonus and the individual performance factor.
The bonus is paid out in the month of the Annual General
Meeting (AGM) which attends to the financial statements of
RWE AG. After the end of the four-year vesting period, the

performance shares from the SPP are paid out, during the
month of the Annual General Meeting held in the following
year. As explained earlier, Executive Board members must
invest 25 % of the payment in RWE common shares and
may not liquidate these shares until after three additional
calendar years have passed from completion of the four-year
vesting period. As a result, it takes a total of seven years for
Executive Board members to obtain the full amount of their
compensation.

Executive Board compensation payment timeline for a fiscal year

Bonus

Payment in the
month in which
the AGM is held

Strategic
Performance
Plan

Payment in the
month in which
the AGM is held

25 % reinvestment
in RWE shares

End of the
minimum
holding period

Pension instalment

Payment
at year-end

Fixed salary

Monthly
payment

Fiscal year

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Combined review of operations > Compensation report

Pension scheme. Until the introduction of the pension
instalment as of 1 January 2011 described earlier, pension
benefits were granted to the members of the Executive
Board. Of the Executive Board members in 2017, this only
applies to Rolf Martin Schmitz; the pension commitment
made to him in 2009 will remain unchanged. It entitles him
to life-long retirement benefits in the event of retirement
from the Executive Board of RWE AG upon turning 60,
permanent disability, early termination or non-extension of
the employment contract by the company. In the event of
death, surviving dependants are entitled to the benefits.
The amount of Rolf Martin Schmitz’s qualifying income and
the level of benefits determined by the duration of service are
taken as a basis for his individual pension and surviving
dependants’ benefits.

Change in corporate control. If shareholders or third parties
obtain control over the company and this results in major
disadvantages for the Executive Board members, they have
a special right of termination. They have the right to resign
from the Executive Board and to request that their employment
contract be terminated in combination with a one-off payment
within six months of the change of control.

A change of control as defined by this provision occurs when
one or several shareholders or third parties acting jointly
account for at least 30 % of the voting rights in the company,

or if any of the aforementioned can exert a controlling
influence on the company in another manner. A change of
control also occurs if the company is merged with another
legal entity, unless the value of the other legal entity is less
than 50 % of the value of RWE AG.

On termination of their employment contracts, Executive
Board members receive a one-off payment equalling the
compensation due until the end of the term of their contract:
this amount will not be higher than three times their total
contractual annual compensation. The share-based payments
under the SPP are not considered here.

In the event of a change of control, all of the fully vested
performance shares under the SPP that have not been paid out
are paid out early. All performance shares granted under the
SPP on a preliminary basis lapse on the date of the change
of control.

Early termination and severance cap. Following a
recommendation of the GCGC, the Executive Board’s
employment contracts include a provision stipulating that if
an Executive Board mandate is otherwise terminated early
without due cause, a severance payment of no more than
the remuneration due until the end of the employment
contract and no more than two total annual compensations
including fringe benefits is made (severance cap).

Level of Executive Board compensation

The following section presents the compensation granted to
the Executive Board members of RWE AG for their work in
fiscal 2017. It was calculated in compliance with the rules
set out in the German Commercial Code.

Total compensation for fiscal 2017. Pursuant to the
calculation regulations of the German Commercial Code, the
total compensation of the Executive Board for fiscal 2017
amounted to €7,274,000. This includes sums received by
Uwe Tigges through to 30 April 2017 for his dual offices on
the Executive Board of RWE AG and innogy SE. These
emoluments were paid by innogy SE and were refunded by
RWE AG on a prorated basis. Total compensation in 2016
amounted to €15,486,000. This figure includes the sums
received by Peter Terium and Bernhard Günther until
they resigned from the Executive Board of RWE AG on
14 October 2016.

Level of individual compensation components. In 2017,
non-performance-based components, i.e. the fixed salary of
the Executive Board members, fringe benefits and the
pension instalment, amounted to €2,342,000 (previous year:
€4,471,000). Pursuant to the German Commercial Code,
the annual service cost of the pension commitment to Rolf
Martin Schmitz is not recognised as compensation, as
opposed to the pension instalment of €255,000 paid to Markus
Krebber (previous year: a prorated €64,000). The pension
instalment of €85,000 paid to Uwe Tigges for the period
ending on 30 April 2017 is included in this figure (previous
year: €255,000 for the full year).

In 2017, performance-based components, consisting of the
Executive Board members’ bonuses and grants under the
SPP, amounted to a total of €4,932,000 (previous year:
€11,015,000). This and the following figures for 2017

70 RWE Annual Report 2017

consider the prorated compensation of Uwe Tigges until his
resignation. Accordingly, the prior-year figures also include
the compensation paid to Peter Terium and Bernhard Günther
until their resignation. Of the performance-based components
of the Executive Board members, €2,365,000 (previous year:
€4,115,000) was attributable to the bonus for fiscal 2017
paid directly and €2,567,000 (previous year: €2,987,000) to
the allocation of performance shares under the SPP.

As set out on page 66, the level of the bonus largely depends
on adjusted EBIT. For fiscal 2017, the Supervisory Board
had set a target of €3,573 million (100 % target achievement)
and a cap of €4,288 million (150 % target achievement).

Including adjustments, this resulted in an actual figure of
€3,676 million. Accordingly, the degree to which the target
was achieved was 107 %. In calculating the actual figure,
adjustments were made in order to account for structural
differences between actual and target figures. These
differences result in particular from impairments or unscheduled
special items (e. g. sales proceeds).

The following table summarises the short-term remuneration
paid in accordance with the German Commercial Code for
fiscal 2017.

Short-term Executive
Board compensation1

Dr. Rolf Martin
Schmitz

Dr. Markus Krebber

Uwe Tigges

Peter Terium

Dr. Bernhard
Günther

Total

since 1 Oct 2016

until 30 Apr 2017

until 14 Oct 2016

€ ‘000

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

Non-performance-based
compensation

Fixed compensation

960

750

188

250

750

Fringe benefits
(company car,
accident insurance)

Other payments
(pension instalments)

Total

Performance-based
compensation

–

975

–

255

979

1,025

256

342

255

1,025

Direct bonus payment

1,168

962

643

133

213

861

Compensation for
mandates2

Bonus

Total

138

1,306

2,281

150

1,112

2,091

203

846

1,871

211

467

–

213

555

881

1,906

–

1,050

360

1,433

1,224

1,251

2,684

–

563

1,960

3,511

191

778

340

870

2,342

4,471

635

2,024

3,815

660

1,438

341

2,365

4,707

300

4,115

8,586

1 The table is based on the Group perspective. The figures include all the emoluments received by Uwe Tigges, Peter Terium and Bernhard Günther for their work on the

Executive Boards of RWE AG and innogy SE until they resigned from the Executive Board of RWE AG. Pursuant to the German Commercial Code, RWE AG may only state in
its separate financial statements the partial amounts that are allocable to it in economic terms. Only Uwe Tigges worked for both companies in fiscal 2017. In the separate
financial statements of RWE AG, he is allocated non-performance-based compensation of €171,000 and performance-based compensation of €107,000.

2 In 2017, the compensation for exercising intragroup supervisory board offices was fully set off against the bonus.

Share-based payment according to the Strategic
Performance Plan. In fiscal 2017, Rolf Martin Schmitz and
Markus Krebber were granted performance shares under
the SPP of RWE AG, whereas Uwe Tigges received performance
shares under the SPP of innogy, which has a similar structure.
The following overview shows the volume of performance
shares issued. The main factor in determining the ratio of
the number of performance shares granted on a preliminary
basis to the final number of performance shares granted was
the adjusted net income of the RWE Group in fiscal 2017.
The Supervisory Board established an actual figure of

€806 million for this. The amount differs from the figure
mentioned on page 48 (€1,232 million) because more
adjustments were necessary, as required by the SPP
conditions. These adjustments are the same as the ones
made to calculate the actual figure for adjusted EBIT (see
above). Based on a target of €686 million (grant of 100 %)
and a cap of €1,086 million (grant of 150 %) the final grant
amounts to 115 % of the performance shares granted on a
preliminary basis. The allocation ratio for Uwe Tigges was
aligned to innogy’s adjusted net income and was 88 % in 2017.

Combined review of operations > Compensation report

Long-term incentive payment1
Strategic Performance Plan

Dr. Rolf Martin Schmitz

Dr. Markus Krebber
since 1 Oct 2016

Uwe Tigges
until 30 Apr 2017

Tranche

Company

Grant date

Fair value at grant date

Share price (average)

Number of performance shares
allocated on a provisional basis

Measurement date of performance
conditions

Target achievement in relation to
adjusted net income

Final number of fully granted
performance shares

End of the vesting period

Year

€ ‘000

€

2017

RWE AG

2016

RWE AG

2017

RWE AG

2016

2017

2016

RWE AG

innogy SE

1 Jan 2017

1 Jan 2016

1 Jan 2017

1 Jan 2016

1 Jan 2017

1 Jan 2016

1,250

11.62

769

13.78

988

11.62

247

13.78

329

32.07

706

37.13

107,573

55,787

84,983

17,915

10,264

19,021

31 Dec 2017

115

123,709

64,155

97,730

20,602

9,032

16,738

31 Dec 2020

31 Dec 2019

31 Dec 2020

31 Dec 2019

31 Dec 2020

31 Dec 2019

1 From the Group perspective, the compensation stated for Uwe Tigges under the SPP of innogy SE is share-based. In accordance with the German Commercial Code, the separate
financial statements of RWE AG are based on a different perspective: as the payment depends on the innogy share instead of on the development of the RWE share, the SPP
compensation received by UWE Tigges is classified as non-share-based and is only included in total remuneration once the payment conditions are met.

The table below shows the level of provisions formed for
share-based payment obligations under the SPP.

Addition of provisions for long-term share-based incentive payments
€ ‘000

Dr. Rolf Martin Schmitz

Dr. Markus Krebber

Uwe Tigges

Peter Terium

Dr. Bernhard Günther

Total

since 1 October 2016

until 30 April 2017

until 14 October 2016

Obligations under the former pension scheme. The service
cost of pension obligations to Rolf Martin Schmitz amounted
to €538,000 in 2017 (previous year: €229,000). This is not a
compensation component in accordance with the German
Commercial Code. As of year-end, the net present value of
the defined benefit obligation determined in accordance
with International Financial Reporting Standards (IFRS)
amounted to €12,391,000 (previous year: €13,923,000). The
value of the pension obligation determined according to the
German Commercial Code totalled €9,287,000 (previous
year: €9,894,000). The pension obligation for 2017 decreased
by €607,000 (previous year: increase of €435,000).

2017

2016

592

393

124

–

1,109

141

134

143

546

Based on the emoluments qualifying for a pension as of
31 December 2017, the projected annual pension of Rolf
Martin Schmitz on retiring from the company as of the expiry
of his appointment amounts to €556,000 (previous year:
€484,000). This includes vested pension benefits due from
former employers transferred to RWE AG.

72 RWE Annual Report 2017

Recommendations of the German Corporate Governance Code

According to the version of the German Corporate Governance
Code (GCGC) published on 7 February 2017, the total
remuneration of management board members comprises
the monetary compensation elements, pension commitments,
other awards, fringe benefits of all kinds and benefits from
third parties which were granted or paid in the financial
year with regard to management board work. Item 4.2.5,
Paragraph 3 of the Code lists the compensation components
that should be disclosed. Unlike under German commercial
law, according to the GCGC the annual service cost of pension
benefits is also part of total compensation.

The GCGC provides specific examples for the recommended
presentation of management board compensation based
on model tables, which distinguishes between ‘benefits
granted’ and ‘benefits received’.

• According to the GCGC, benefits or compensation are

granted when a binding commitment to such is made to
the manage ment board member. In deviation from
German commercial law, it is not relevant to what extent
the management board member has already provided
the services being remunerated.

• The term ‘benefits received’ defines the extent to which
the management board member has already received
payments. In this regard, the relevant aspect is the time at
which the amount being paid is sufficiently certain and not
the actual time of the payment.

This distinction made in the Code can be illustrated with the
example of the bonus: the contractually agreed and
promised budgeted bonus for the fiscal year in question is
considered ‘granted’. Conversely, the benefits received table
shows the bonus level which will actually be paid with a high
degree of probability. In this regard, it is not relevant that no
payment actually took place during the year in question. The
payment date is deemed to have been reached when the
indicators and results needed to determine target achievement
(and therefore the bonus) are known with sufficient certainty.
The Code assumes that this is already the case at the end of
the year. As a result, the one-year Executive Board bonuses
are stated in the reporting year in the benefits granted table.

In the following, we present the compensation of the
Executive Board of RWE AG in the manner recommended by
the GCGC, based on the sample tables.

Benefits granted

€ ‘000

Fixed compensation

Pension instalment

Fringe benefits

Total fixed compensation

One-year variable compensation

Bonus

Multi-year variable compensation

SPP 2016 tranche1
(term: 2016–2019)

SPP 2017 tranche
(term: 2017–2020)

Total variable compensation

Total

Service cost

Total compensation

Dr. Rolf Martin Schmitz
since 1 May 2009,
Chief Executive Officer
since 15 Oct 2016

Dr. Markus Krebber
since 1 Oct 2016,
Chief Financial Officer
since 15 Oct 2016

2016

2017

2016

2017

960

–

979

900

769

–

1,669

2,648

229

2,877

960

–

975

1,100

1,250

–

1,250

2,350

3,325

538

3,863

2017
(Min)

960

–

975

–

975

538

1,513

2017
(Max)

960

–

975

1,980

2,500

–

2,500

4,480

5,455

538

5,993

2017
(Min)

750

255

750

255

1,025

713

988

–

988

1,701

2,726

–

1,025

–

2017
(Max)

750

255

1,025

1,283

1,975

–

1,975

3,258

4,283

–

2,726

1,025

4,283

188

256

178

247

–

425

681

–

681

1 The grant contains the contractual bonus retention for the period up to 30 September 2016, which was transferred to the 2016 tranche of the SPP on this one occasion.

Combined review of operations > Compensation report

Benefits granted

€ ‘000

Fixed compensation

Pension instalment

Fringe benefits

Total fixed compensation

One-year variable compensation

Bonus

Multi-year variable compensation

SPP 2016 tranche1
(term: 2016–2019)

SPP 2017 tranche
(term: 2017–2020)

Total variable compensation

Total

Service cost

Total compensation

Uwe Tigges
Chief HR Officer/Labour Director
until 30 Apr 2017

2016

2017

750

255

1,025

713

706

–

1,419

2,444

–

2,444

250

342

238

329

–

329

567

909

–

909

2017
(Min)

250

342

–

342

–

342

2017
(Max)

250

342

428

658

–

658

1,086

1,428

–

1,428

1 The grant contains the contractual bonus retention for the period up to 30 September 2016, which was transferred to the 2016 tranche of the SPP on this one occasion.

Benefits received

€ ‘000

Fixed compensation

Pension instalment

Fringe benefits

Total fixed compensation

One-year variable compensation

Bonus1

Multi-year variable compensation

Bonus retention
2013–2015 (released)

SPP 2016 tranche
(term: 2016–2019)

SPP 2017 tranche
(term: 2017–2020)

Total variable compensation

Total

Service cost

Total compensation

Dr. Rolf Martin Schmitz
since 1 May 2009,
Chief Executive Officer
since 15 Oct 2016

Dr. Markus Krebber
since 1 Oct 2016,
Chief Financial Officer
since 15 Oct 2016

Uwe Tigges
Chief HR Officer/
Labour Director
until 30 Apr 2017

2017

960

–

975

1,306

–

1,306

2,281

538

2,819

2016

960

–

979

1,112

947

–

2,059

3,038

229

3,267

2017

750

255

1,025

846

–

846

1,871

–

1,871

2016

188

256

211

–

211

467

–

467

2017

250

342

213

–

213

555

–

555

2016

750

255

1,025

881

723

1,604

2,629

–

2,629

1 The bonus includes compensation for exercising intragroup supervisory board offices; also see the table ‘Short-term Executive Board compensation’ on page 70.

74 RWE Annual Report 2017

1.12 DEVELOPMENT OF RISKS AND OPPORTUNITIES

RWE’s risk position is significantly affected by changes in the regulatory framework in the energy sector. State
intervention with the object of reducing greenhouse gas emissions could have a very negative effect on us, in
particular if it leads to an accelerated exit from coal-based electricity generation. This applies first and foremost to
our home market Germany. The development of prices on wholesale markets for electricity, fuel and emission
allowances also exposes us to substantial risks – as well as opportunities, as demonstrated by the recovery of electricity
prices in the last two years. The RWE Group rests on a solid foundation in both financial and organisational terms.
One of the key elements of this foundation is our risk management, which has proven itself over many years, enabling
us to identify, assess and control risks systematically.

Redistribution of risk management responsibilities in the
RWE Group. The restructuring of the RWE Group also involved
the reorganisation of our risk management. Since its public
listing in October 2016, innogy SE has controlled its risks
independently – as well as those of its subsidiaries. As regards
all of the other Group companies, responsibility remains with
RWE AG. The manner in which RWE AG records innogy’s risks
has also changed. Since we fully consolidate our subsidiary
in the Group’s financial statements, but manage it as a financial
investment, our analysis essentially focuses on the market
value of our investment in innogy and changes in this
value. We map the risk of losses in value inter alia using a
mathematical model which tracks the history of the
investment’s share price. Furthermore, innogy provides us
with semi-annual reports on its individual risks. Based on this
information, we determine whether the market value risk we
have calculated for the investment in innogy needs to be
corrected. If, for example, we were to find that the individual
risks reported by innogy have been underestimated, we
would put the risk of negative changes in market value into
a higher category.

The following is a detailed presentation of RWE AG’s risk
management. Corresponding information regarding innogy
can be found in our subsidiary’s latest annual report.

Organisation of RWE AG’s risk management. The primary
responsibility for our risk management lies with the Executive
Board of RWE AG. It monitors and manages the overall risk of
the Group and its operational subsidiaries. In doing so, it
determines the risk appetite of RWE and defines upper limits
for risk positions.

At the level below the Executive Board, the Controlling & Risk
Management Department has the task of applying and
developing the risk management system. It derives detailed
limits for the individual business fields and operating units
from the risk caps set by the Executive Board. Its tasks also
include checking the identified risks for completeness and
plausibility and aggregating them. In so doing, it receives
support from the Risk Management Committee, which is

composed of the heads of the following five RWE AG
departments: Accounting, Controlling & Risk Management
(Chair), Corporate Business Development, Finance & Credit
Risk and Legal. The Controlling & Risk Management
Department provides the Executive Board and the Supervisory
Board of RWE AG with regular reports on the company’s
risk exposure.

A number of additional organisational units and committees
have been entrusted with risk management tasks:

• Financial risks and credit risks are managed by the Finance &
Credit Risk Department, which reports directly to the CFO
of RWE AG.

• The Accounting Department is responsible for risks involved
in financial reporting. It also reports directly to the CFO
of RWE AG and uses an accounting-related internal control
system, which is described on page 82.

• The Internal Audit & Compliance Department monitors

compliance with RWE’s Code of Conduct. One of its main
focal points is avoiding corruption risks. It reports to the
CEO of RWE AG or, if members of the Executive Board are
affected, directly to the Chairman of the Supervisory
Board and the Chairman of the Supervisory Board’s Audit
Committee.

• In so far as they relate to the conventional electricity
generation, energy trading and gas businesses, risks
from changes in commodity prices are monitored by
RWE Supply & Trading.

• Strategies to limit market risks from the generation business
are approved by the Commodity Management Committee.
This is an expert body which currently consists of the CFO
of RWE AG, members of the management of RWE Supply &
Trading and a representative of the Controlling & Risk
Management Department.

Combined review of operations > Development of risks and opportunities

• The strategic guidelines for the management of financial
assets (including the funds of RWE Pensionstreuhand e.V.)
are determined by the Asset Management Committee. This
body also currently attends to this task for the financial
investments of innogy SE. Its members include the CFO of
RWE AG, the head of the Finance & Credit Risk Department,
the head of the Portfolio Management/Mergers & Acquisitions
Department and the head of Financial Asset Management
from the Portfolio Management/Mergers & Acquisitions
Department. The heads of the innogy Finance and
Controlling & Risk Departments and the CFO of innogy’s
Grid & Infrastructure Division are also members.

• There is also a committee at RWE AG which supports the
accounting teams and the functions of high relevance to
accounting in preventing the incorrect financial reporting
of risks (see page 82).

Under the expert management of the aforementioned
organisational units, RWE AG and its operating subsidiaries
are responsible for identifying risks early, assessing them
correctly and managing them in compliance with central
standards. The Internal Audit Department regularly assesses
the quality and functionality of our risk management system.

RWE AG risk matrix

Potential damage1

Category V

Category IV

Category III

Category II

Category I

1 % ≤ P ≤ 10 %

10 % < P ≤ 20 %

20 % < P ≤ 50 %

P > 50 %

Low risk

Medium risk

High risk

Probability of occurrence (P)

Potential damage

Earnings risks2
Potential impact on net income – compared to
adjusted EBITDA3 and equity4

Indebtedness/liquidity/equity risks2
Potential impact on net debt
and equity

Category V

Category IV

Category III

Category II

Category I

≥ 50 % of equity

≥ €8 billion

≥ 100 % of adjusted EBITDA and < 50 % of equity

≥ €4 billion and < €8 billion

≥ 40 % and < 100 % of adjusted EBITDA

≥ €2 billion and < €4 billion

≥ 20 % of EBITDA and < 40 % of adjusted EBITDA

≥ €1billion and < €2 billion

< 20 % of adjusted EBITDA

< €1 billion

1 In relation to the aggregated level of damage from 2018 to 2020.
2 innogy is not included in the figures as a fully consolidated company, but as a pure financial investment (see page 60).
3 Average for 2018 to 2020 derived from the medium-term plan.
4 Equity as of 30 September 2017 (€14,990 million).

76 RWE Annual Report 2017

Risk management as a continuous process. Risks and
opportunities are defined as negative or positive deviations
from expected figures. Their management is an integral and
continuous part of operating processes. We assess risks
every six months, using a bottom-up analysis. We also monitor
risk exposure between the regular survey dates. The Executive
Board of RWE AG is immediately notified of any material
changes. Our executive and supervisory bodies are updated
on the risk exposure on a quarterly basis.

Our analysis normally covers the three-year horizon of our
medium-term plan, but can extend beyond that for long-term
risks. We evaluate risks to determine their impact on net
income on the one hand and on net debt and equity on the
other hand. We calculate the probability of occurrence for
all risks as well as their potential damage. Risks that share
the same cause are aggregated to a single risk. We analyse
the material individual risks of the RWE Group using a
matrix in which the risks’ probability of occurrence and
potential net damage are represented, i.e. taking account
of hedging measures such as hedge transactions. Depending
on their position in the matrix, we distinguish between low,

medium and high risks. Based on this analysis, we determine
whether there is a need for action and initiate measures to
mitigate the risks if necessary.

We have made adjustments to the method used to quantify
risks. Whereas in 2016 we used key figures in which innogy
was included as a fully consolidated company, we now
record our subsidiary as a purely financial investment. Details
on this approach can be found on page 60. This change
caused the figure for equity, which we use as a basis to scale
earnings risks, to increase significantly. A second change in
methodology relates to the effects which risks can have on
net income. We now calculate them as percentages of
adjusted EBITDA instead of adjusted EBIT. Adjusted EBITDA
is the more important management parameter. Since it does
not include depreciation or amortisation, it comes closer to
the cash flows from operating activities, which are of huge
significance especially for managing our power plant portfolio.
Due to the adjustments described above, the limits that we
use to categorise earnings risks changed substantially. By
contrast, the limits that we use to classify the effects of risks
on net debt and equity have not changed.

Risk classes1

Market risks

Regulatory and political risks

Legal risks

Operational risks

Financial risks

Creditworthiness of business partners

Other risks

Classification of the highest single risk

31 Dec 2017

31 Dec 2016

Medium

High

Medium

High

Medium

Low

Medium

High

Medium

Low

Medium

1 In the risk assessment as of 31 December 2017, innogy is only recorded based on the risk of changes in the market value of our investment in the company, whereas in the risk

assessment as of 31 December 2016, innogy’s individual risks were still considered.

Main risks for the RWE Group. As presented in the table
above, our main risks can be classified into seven groups,
depending on their nature. The highest individual risk
determines the classification of the risk of the entire risk class.
As mentioned earlier, we consider innogy in the assessment
as a pure financial investment, the aggregated total risk of
which consists of declines in its share price. The individual

risks of our subsidiary, on which we provide information
on page 80 et seq., are no longer presented separately in
our risk matrix. As we record the possibility of a decline in
innogy’s share price in our matrix, the financial risks have
been reclassified from ‘medium’ to ‘high’. We also classify
our regulatory and political risks as ‘high’. This assessment
did not change compared to the previous year.

Combined review of operations > Development of risks and opportunities

In the following, we discuss the main risks and opportunities
and explain what measures have been taken to counter the
threat of negative developments.

• Market risks. In most of the countries in which we are active
the energy sector is characterised by the free formation of
prices. Declines in quotations on wholesale electricity
markets can cause power plants and electricity procurement
contracts concluded at fixed prices to become less
economically feasible and, in some cases, even unprofitable.
In such events, we may have to recognise impairments or
form provisions. Following an extended downward trend,
in 2016 and 2017, wholesale electricity prices picked up
again in our most important generation markets, Germany,
the United Kingdom and the Netherlands. The main reason
for this was that fuel quotations recovered, especially of
hard coal. It cannot be ruled out that this upward trend
stops or that electricity prices decrease substantially
again. However, there is also a chance that this recovery
continues and that future realisable generation margins
rise further.

In addition to fuel costs, demand for electricity and the
amount of generation capacity available to meet it are also
decisive to the development of wholesale electricity prices.
Risks also exist here due to the expansion of electricity
storage. For example, the increased use of batteries could
result in households with photovoltaic units becoming inde-
pendent from the regular electricity market. Conversely,
the electrification of the heating and transportation sec-
tor would have positive effects on demand for electricity.
Above and beyond this, we expect the ongoing reduction
of secured generation capacity in our home market Germany
to increasingly lead to shortages with high electricity prices.

We assess the price risks to which we are exposed on the
procurement and supply markets taking account of current
forward prices and expected volatility. For our power
plants, we limit margin risks by selling most of our electricity
forward and securing the prices of the fuel and CO2 emission
allowances needed for its generation. Our goal is to limit
the consequences of negative price developments and tap
into additional earnings potential.

RWE Supply & Trading plays a central role when it comes to
managing commodity price risks. It functions as the Group’s
interface to the global wholesale markets for electricity and
energy commodities. The company markets large portions
of our power generation and purchases the necessary fuels
and CO2 certificates needed to produce electricity. The
role of RWE Supply & Trading as internal transaction partner
makes it easier for us to limit the risks associated with
price volatility on energy markets. However, the trading
transactions are not exclusively intended to reduce risks.
To a limited degree, the company also takes commodity
positions to achieve a profit.

Our risk management system for energy trading is firmly
aligned with best practice as applied to the trading
businesses of banks. As part of this, transactions are
concluded with third parties only if the credit risks are
within approved limits. There are guidelines governing
the treatment of commodity price risks and associated
credit risks. Our subsidiaries constantly monitor their
commodity positions. Risks associated with trades
conducted by RWE Supply & Trading for its own account
are monitored daily.

The Value at Risk (VaR) is of central importance for risk
measurement in energy trading. It specifies the maximum
loss from a risk position not exceeded with a given
probability over a certain period of time. The VaR figures
within the RWE Group are based on a confidence interval
of 95 %. The assumed holding period for a position is one
day. This means that, with a probability of 95 %, the daily
loss will not exceed the VaR.

The VaR for commodity positions in the trading business
of RWE Supply & Trading may not rise above €40 million. In
the financial year that just closed, it averaged €10 million
(previous year: €17 million), and the daily maximum was
€15 million (previous year: €34 million). In the middle of
2017, we pooled the management of our gas portfolio
and our liquefied natural gas (LNG) business in a new
organisational unit at RWE Supply & Trading and established
a VaR cap of €12 million for these activities. The average
VaR measured from the foundation of the organisation
unit until the end of 2017 was €3 million. Additionally, we
have set limits for each trading desk. Furthermore, we
develop extreme scenarios and factor them into stress tests,
determine their consequences for earnings, and take
countermeasures if we deem the risks to be too high.

78 RWE Annual Report 2017

We also apply the VaR concept to measure the extent to
which the commodity price risks that we are exposed to
outside the trading business can affect the RWE Group’s
adjusted EBITDA. To this end, we calculate the overall risk
for the Group on the basis of the commodity risk positions
of the individual companies; this overall risk mainly stems
from power generation. As the majority of our generation
position is already fully hedged for 2018, only minor
market price risks remain for this year. Additionally, profit
opportunities arise, because we are able to adapt our
power plant deployment to short-term market developments
flexibly.

In certain cases, financial instruments used to hedge
commodity positions are presented as on-balance-sheet
hedging relationships in the consolidated financial
statements. This also applies to the financial instruments
we use to limit interest and currency risks. More detailed
information can be found in the Notes to the consolidated
financial statements on page 141 et seqq.

Our biggest market risks remain unchanged in the ‘medium’
category.

• Regulatory and political risks. Energy supply is a long-term
business and companies involved in this industry are
particularly dependent on a stable, reliable framework.
Stricter thresholds for emissions can result in massive
declines in earnings, if the transition periods are too short
and existing plants have to be shut down early. This kind
of risk emanates from the German Climate Action Plan
2050, which was adopted at the end of 2016 (see page 33
of the 2016 Annual Report). According to the Plan, by
2030 the energy sector must lower its emissions by more
than 60 % compared to the level of 1990. We view this
target as being very ambitious and see a risk that coal-fired
power stations may have to be decommissioned earlier
than planned. In the Netherlands, the new government is
planning a complete exit from coal by 2030, and it intends
to make carbon dioxide emissions by power plants more
expensive by introducing a CO2 tax. Such measures can
place a huge burden on us. In a dialogue with
policymakers, we want to point out the possible negative
effects of an overly ambitious path of emissions reductions,
in particular with regard to security of supply.

We are also exposed to risks in the field of nuclear energy,
albeit to a much lesser extent than in the past. Last year, a
German law redistributing responsibility for nuclear waste
management between the federal government and the
power plant operators was enacted (see page 35). Since
the companies made contributions to the new nuclear

energy fund in the middle of 2017, they have no longer
been liable for the costs of interim and final storage. We
have reaffirmed this in legal terms with the Federal
Republic of Germany by way of a contract. However, we
are exposed to cost risks associated with disposal tasks
for which we remain responsible in operating and financial
terms. For example, it cannot be ruled out that the
dismantling of nuclear power stations will be more expensive
than planned.

Another issue that has been clarified is the legality of the
German nuclear fuel tax, which had been levied from 2011
to 2016. The German Constitutional Court declared the tax
null and void, upon which the Federal government refunded
us the €1.7 billion in tax payments made plus interest (see
page 37). This caused one of our major opportunities to
materialise. However, it cannot be ruled out that nuclear
fuel may be taxed again, this time fulfilling the constitutional
requirements.

Even in the present political environment, we are exposed
to risks associated for example with approvals when
building and operating production facilities. This particularly
affects our opencast mines and power stations. The
danger here is that new-build projects receive late or no
approval, or granted approvals are withdrawn. Depending
on the progress of construction work and the contractual
obligations to suppliers, this can have a very negative
financial impact. We try to limit this risk as much as possible
by preparing our applications for approval with great
care and ensuring that approval processes are handled
competently.

For us, the regulatory and political risks of most significance
are those resulting from intervention to limit carbon
emissions and make them more expensive. As in the
preceding year, we classified these risks as ‘high’.

• Legal risks. Individual RWE Group companies are involved
in litigation and arbitration proceedings due to their
operations or the acquisition of companies. Out-of-court
claims have been filed against some of them. Furthermore,
companies from the RWE Group are directly involved in
various procedures with public authorities or are at least
affected by their outcomes. We have accrued provisions
for possible losses resulting from pending proceedings
before ordinary courts and arbitration courts.

Combined review of operations > Development of risks and opportunities

Risks may also result from exemptions and warranties that
we granted in connection with the sale of shareholdings.
Exemptions ensure that the seller covers the risks that are
identified within the scope of due diligence, the probability
of occurrence of which is, however, uncertain. In contrast,
warranties also cover risks that are unknown at the time
of sale. The hedging instruments described above are
standard procedure in sales of companies and equity
holdings. The maximum classification of our legal risks is
‘medium’. There was no change in this regard compared
to the previous year.

• Financial risks. The volatility of market interest rates, foreign
exchange rates and share prices can have a significant
effect on our financial position. Above all, the development
of innogy’s share price is important to us. A crash on the
stock markets and negative developments at innogy can
cause the market value of our stake in the company to
decline significantly. This risk has partially materialised: the
innogy share dropped considerably in value in December
2017 due to a profit warning issued by management.
However, innogy may well regain the trust of the capital
market and its share price may recover.

• Operational risks. RWE operates technologically complex,
interconnected production facilities. During their construction
and modernisation, delays and cost increases can occur,
for example due to accidents, material defects, late deliveries
or time-consuming approval processes. We counter this
through diligent plant and project management as well as
high safety standards. We also regularly inspect and
maintain our facilities. Nevertheless, it is impossible to
prevent occasional outages. If economically viable, we take
out insurance policies.

In relation to capital expenditure on property, plant and
equipment and intangible assets, there is a risk that the
return may fall short of expectations. Furthermore, prices
paid for acquisitions may retrospectively prove to be too
high. However, it is also possible that the returns on
investments turn out to be higher than originally assumed.
We conduct extensive analyses to try and map the financial
and strategic effects of transactions as realistically as
possible. Moreover, RWE has specific accountability
provisions and approval processes in place to prepare and
implement investment decisions.

Our business processes are supported by secure data
processing systems. Nevertheless, we cannot rule out a
lack of availability of IT infrastructure or a breach in data
security. Our high security standards are designed to
prevent this. In addition, we regularly invest in hardware
and software upgrades. We now classify our operating
risks as ‘medium’ as opposed to ‘low’ in the previous year.
This is because we anticipate higher wholesale electricity
prices than before. If this expectation materialises, power
station outages would result in more significant drops
in margins. However, our assumptions concerning the
frequency of such events have not changed.

RWE holds other shares besides those in innogy. The average
VaR for the share price risk of this paper was €2 million
(previous year: €8 million).

We are exposed to foreign exchange risks primarily owing
to our business activities in the United Kingdom.
Furthermore, energy commodities such as coal and oil are
traded in US dollars. Companies which are overseen by
RWE AG have their currency risks managed by the parent
company. RWE AG aggregates the risks to a net financial
position for each currency and hedges it if necessary. In
2017, the average VaR for RWE AG’s foreign currency
position was less than €1 million. The same applies to
the prior year.

We differentiate between several categories of interest
rate risks. For example, rises in interest rates can lead to
reductions in the price of the securities we hold. This
primarily relates to fixed-interest bonds. The VaR for the
interest rate-related price risk of capital investments was
€5 million on average at RWE AG (previous year: €9 million).

Moreover, increases in interest rates cause our financing
costs to rise. We measure this risk using the cash flow at
risk (CFaR), applying a confidence level of 95 % and a
holding period of one year. The average CFaR at RWE AG
was €3 million. Due to the reorganisation, there is no
average figure for the prior year.

Furthermore, market interest rates have an effect on our
provisions, as they are the point of reference for the
discount rates used for determining the net present values
of obligations. This means that in the case of declining
market interest rates our provisions generally rise and
vice versa.

80 RWE Annual Report 2017

Risks and opportunities from changes in the price of
securities are controlled by a professional fund management
system. Range of action, responsibilities and controls are
set out in internal guidelines which the Group companies
are obliged to adhere to when concluding financial
transactions. All financial transactions are recorded using
special software and are monitored by RWE AG.

The conditions at which we can finance our business on
the debt capital market are dependent on the credit ratings
we receive from international rating agencies. As set
out on page 55, Moody’s and Fitch place our long-term
creditworthiness in the investment grade category with a
stable outlook. However, the agencies may change their
assessments and lower our credit rating at any time. This
can result in additional costs if we have to raise debt capital
or hedge trades.

We classify our financial risks as ‘high’ because they now
also contain the share price risk associated with our stake
in innogy (previous year: ‘medium’).

• Creditworthiness of business partners. Our business
relations with key accounts, suppliers, trading partners
and financial institutions expose us to credit risks. Therefore,
we track the creditworthiness of our partners closely and
assess their credit standing based on internal and external
ratings, both before and during the business relationship.
Transactions that exceed certain approval thresholds and
all trading transactions are subject to a credit limit, which
we determine before the transaction is concluded and
adjust if necessary, for instance in the event of a change
in creditworthiness. At times, we request cash collateral or
bank guarantees. Credit risks and the utilisation of the limits
in the trading and financing business are measured daily.

We agree on collateral when concluding over-the-counter
trading transactions. Furthermore, we enter into framework
agreements, e.g. those of the European Federation of
Energy Traders (EFET). For financial derivatives, we make
use of the German master agreement for forward financial
transactions or the master agreement of the International
Swaps and Derivatives Association (ISDA).

As in the past, our risks stemming from the creditworthiness
of our business partners do not exceed the category
‘medium’.

• Other risks. This risk class includes reputation risks and
risks associated with non-compliance and criminal
offences committed by employees of the Group. It also
encompasses the possibility of planned divestments
not being implemented, for example owing to regulatory
requirements or the lack of acceptable bids. We consider
other risks to be low. Including innogy, we had classified
them as ‘medium’ in the previous year.

innogy’s risk exposure. The development of the market
value of our 76.8 % shareholding in innogy is mainly affected
by the individual risks of our subsidiary. We have outlined
some of these risks below. Detailed information on this topic
can be found in innogy’s current annual report.

• Earnings in the renewable energy business strongly depend
on state subsidy systems. Here, there is a risk that the
realisable compensation declines and new projects cease
to be attractive. This can lead to investment undertaking
being broken off. Reductions in the subsidisation of
existing generation units cannot be fully ruled out. The
revenue of these plants is also exposed to the risk of
unfavourable market developments to the extent that it
is partly determined by wholesale electricity prices. This
particularly applies to wind farms when subsidies have
expired. If such risks materialise, impairments may have to
be recognised for these plants or they may have to be sold
below their carrying amount. However, these plants can
earn unexpectedly high returns if wholesale electricity
prices increase.

• In the grid business, risks arise predominantly from the
regular adjustments to the regulatory framework. In
Germany, the new five-year regulatory period began on
1 January 2018 for gas network operators and on
1 January 2019 this will be the case for electricity network
operators. Major decisions regarding these periods by the
regulatory authorities are still pending. For example, cost
reviews are yet to be completed for innogy’s network
companies, and the maximum allowable revenues must be
established. There is the risk that regulatory authorities
set low revenue caps and require the companies to achieve
significant cost savings. However, it is also possible that
the network operators are granted favourable
conditions. Margins realisable in the gas storage business,
which is assigned to the Grid & Infrastructure division,
depend in part on seasonal differences in gas prices. If the
differences are significant, high income can be achieved.
In contrast, declines in differences can reduce earnings
and lead to impairments.

Combined review of operations > Development of risks and opportunities

innogy monitors these and other risks continuously and
takes countermeasures where necessary. The company does
not currently see any risks that may jeopardise its existence.

Overall assessment of RWE’s risk and opportunity situation:
general assessment by company management. As
demonstrated by the contents of this chapter, RWE’s risk
exposure is largely influenced by the development of
economic and regulatory framework conditions and the
market value of its majority interest in innogy. Regulatory risks
arise inter alia from the German climate protection plan
adopted at the end of 2016, which is to be concretised this
year. We see the danger that we may have to shut down
other coal-fired power plants in addition to the lignite-fired
stations that are on standby. We may also experience
significant burdens in the Netherlands if the government’s
current plans to exit from coal are implemented. By contrast,
risk exposure in nuclear energy has dropped. It is now
established by law how responsibility for nuclear waste
management is divided between the Federal government and
the power plant operators. In addition, the legal uncertainty
over the nuclear fuel tax has been eliminated. As the German
Constitutional Court declared the levy null and void and
we were refunded the tax payments made, one of our most
important opportunities materialised.

Market conditions in electricity generation have a significant
influence on our earnings. German wholesale prices appear
to have emerged from their trough. They are currently far
above the record low recorded at the beginning of 2016. To
a great extent, this is because global prices for hard coal
have recovered. Should these trends reverse and electricity
prices drop sharply once again, significant earnings shortfalls
are to be expected, possibly as well as a downgrade of
our credit rating and additional costs for hedging trading
transactions. However, prices may continue to trend upwards
and generation margins may improve. Such a development
may then occur in Germany if the nuclear phase-out and
additional power plant closures cause reliably available
generation capacity to become tighter.

• innogy faces significant competitive pressure in the retail
business. When competition is tough, cost disadvantages
and a weak performance on the market can quickly lead to
declines in margins and customer losses. innogy mitigates
the risk of sales and margin declines with customer
retention measures, a differentiated price policy and a
high quality of service in all of its retail markets. Our
subsidiary does justice to changing customer demands
by supplementing its offering with innovative products.
In addition to the competitive landscape, regulatory
intervention can also curtail earnings in the retail business.
One such example is the cap on residential customer
tariffs in the United Kingdom. As set out on page 36,
households with prepayment tariffs are given price
protection for a limited period. The same applies to low-
income customers that receive a price reduction known as
the ‘warm home discount’. The government’s plans
envisage all standard-tariff customers benefiting from
contractual price caps. This would cause margins in the UK
supply business to deteriorate further. In view of the
difficult market environment in the United Kingdom,
innogy and SSE agreed to strengthen their UK retail
operations by combining them to form a new, publicly
listed company (see page 38).

• innogy has identified general risks and opportunities

affecting all areas, inter alia in connection with investing
activities. Our subsidiary intends to spur structural change
in the energy sector and seize growth opportunities in
doing so. Accordingly, substantial amounts of capital are
spent on modernising grids, expanding renewable energy
and developing innovative retail offerings. Capital
expenditure on property, plant and equipment and financial
assets can lead to returns below expectations. The price
for acquiring companies may prove to have been too high
in retrospect. Vice-versa, capital expenditure can be more
profitable than originally assumed. innogy is also exposed
to risks in relation to IT security. The damage that can
potentially be caused by cyber attacks has risen due to
progressive digitisation, the increasing interconnectivity
of devices via the internet, and the mounting complexity
of software and hardware. innogy has taken extensive
technical and organisational measures in order to protect
itself from such dangers. Another general risk results from
changes in interest rates. Due to the expansionary
monetary policy of leading central banks, market interest
rates are currently low. Should they fall further, an upward
adjustment may have to be made to the company’s pension
provisions. A rise in interest rates would usually lead to a
decline in pension provisions, but would have the added
disadvantage that refinancing would become more costly.

82 RWE Annual Report 2017

In view of the regulatory pressure and the market risks in
the energy sector, utilities such as RWE must see to it that
they are crisis-proof. On the strength of ambitious efficiency-
enhancing programmes, strict investing discipline and the
IPO of innogy, we have given the Group a solid financial
foundation. By analysing the effects of risks on our liquidity
and pursuing a conservative financing strategy, we ensure
that we always have enough cash and cash equivalents in
order to meet our payment obligations punctually. We have
strong operating cash flows, considerable liquid funds and
great financial leeway, thanks to our commercial paper
programme and the unused line of credit. We budget our
liquidity with foresight, based on the short, medium and
long-term funding needs of our Group companies, and have
a significant amount of minimum liquidity on a daily basis.

Thanks to our comprehensive risk management system and
the measures for safeguarding our financial and earning
power described earlier, we are confident that we can manage
the current risks to RWE. At the same time, we are working
hard to ensure that this remains the case in the future.

resources, procurement, trading and IT – all of which play an
important role in financial reporting – are members of this
Committee.

We subject the ICS to a comprehensive review every year. As
a first step, we examine whether the risk situation is presented
appropriately and whether suitable controls are in place for
the identified risks. In a second step, we test the effectiveness
of the controls. If the ICS reviews are based on accounting-
related processes, e. g. the receipt and processing of invoices
in our service centre in Cracow, the preparation of financial
statements and consolidation, they are conducted by employees
from the Accounting Department. The representatives of the
finance, human resources, purchasing, trading and IT functions
certify whether the agreed ICS quality standards are adhered
to by their respective areas. The Internal Audit Department
and external auditing firms are also involved in the ICS reviews.
The results of the reviews are documented in a report to
the Executive Board of RWE AG. The review conducted in
2017 once again demonstrated that the ICS is an effective
system.

Our ICS reviews do not cover innogy SE or its subsidiaries.
However, these entities apply the aforementioned process
analogously. The results obtained are considered in the
assessment of the ICS of RWE AG.

Within the scope of external reporting, the members of the
Executive Board of RWE AG took an external half-year and
full-year balance-sheet oath, confirming that the prescribed
accounting standards have been adhered to and that the
figures give a true and fair view of the net worth, financial
position and earnings. When in session, the Supervisory
Board‘s Audit Committee regularly concerns itself with the
effectiveness of the ICS. Once a year, the Executive Board of
RWE AG submits a report on this to the committee.

Report on the accounting-related internal control system:
statements in accordance with Sec. 289, Para. 4, and
Sec. 315, Para. 4 of the German Commercial Code. Risks
associated with financial reporting reflect the fact that our
annual, consolidated and interim financial statements may
contain misrepresentations that could have a significant
influence on the decisions made by their addressees. Our
accounting-related Internal Control System (ICS) aims to
detect potential errors that result from non-compliance with
accounting standards. The foundations of the ICS are our
basic principles, which are set out in RWE’s Code of Conduct
and, first and foremost, include our ambition to provide
complete, objective, correct, clear and timely information, as
well as the company’s groupwide guidelines. Building on
this, minimum requirements for the accounting-related IT
systems are designed to ensure the reliability of data collection
and processing. An effective ICS enables the mitigation
of the risk of material misrepresentations. However, it cannot
eliminate it entirely.

RWE AG is responsible for the design and monitoring of the
ICS. These tasks are performed by the Accounting Department.
Additionally, there is a group-wide set of rules for designing
and monitoring the ICS. We also created the ICS Committee.
Its objective is to ensure that the ICS is applied throughout
the Group following uniform principles, meeting high ambitions
in terms of correctness and transparency. Representatives
from the Accounting, Controlling & Risk Management and
Internal Auditing & Compliance departments, along with
the representatives from the areas of finance, human

Combined review of operations > Outlook

1.13 OUTLOOK

Although the decline German wholesale electricity prices halted at the beginning of 2016, we continue to feel the
consequences in 2018. The margins of our power stations, which we realised through forward sales for 2018, were
down year on year. Therefore, in 2018, the RWE Group will probably fall short of the operating result achieved last
year. We anticipate adjusted EBITDA of between €4.9 billion and €5.2 billion and adjusted net income of between
€0.7 billion and €1.0 billion. We will continue to benefit from our ongoing efficiency-enhancement programme. Our
participation in the UK capacity market will also have an increasingly positive effect on our earnings.

Electricity production for 2018 nearly completely sold
forward. In the last two years, the wholesale prices of
electricity and major energy commodities trended back
upwards following a prolonged downward spiral. Their
development depends on a number of factors, which are
almost impossible to predict. However, the future development
of these prices is only of secondary importance to our
earnings in the current fiscal year, as we have already sold
almost all of our electricity generation for 2018 and secured
the prices of the required fuel and emission allowances. The
2018 price we achieved for electricity from our German
lignite-fired and nuclear power stations is below last year’s
average of €31 per MWh.

Adjusted EBITDA in 2018: range of €4.9 to €5.2 billion
expected. We anticipate that the RWE Group’s operating
earnings in the financial year underway will be weaker than
in 2017. We forecast adjusted EBITDA in the range of
€4.9 billion to €5.2 billion. This would be significantly less
than last year. The main reasons for this are lower generation
margins, less income from special items and increased
startup costs for innogy’s growth projects. Assuming relatively
stable operating depreciation, adjusted EBIT is also likely
to drop considerably. Adjusted net income is expected to
decline to between €0.7 billion and €1.0 billion. It differs
from net income under International Financial Reporting
Standards in that the non-operating result, which is
characterised by one-off effects, and further material special
items (including applicable taxes) are deducted from it.

Experts predict that the economy will remain robust.
Based on initial forecasts for 2018, the global economy will
expand by some 3 %, roughly as much as last year. The
economy of the Eurozone is predicted to grow by about 2 %.
The German Council of Economic Experts is of the opinion
that the country will record a gain of 2.2 %. The Dutch
economy is expected to outgrow the Eurozone yet again,
with the Belgian economy failing to keep pace with it. Experts
anticipate an increase of 1.5 % in the United Kingdom. The
general situation in the economies of the RWE Group’s most
important markets in Central Eastern Europe is unlikely to
change much compared to 2017: posting growth of 3 % to
4 %, Poland, the Czech Republic, Hungary and Slovakia may
well remain clearly above the European average.

Demand for energy probably higher than in 2017. Our
forecast for this year’s energy consumption is based on
assumed economic developments. In addition, we anticipate
that temperatures in 2018 will be normal and therefore
lower overall than in 2017, which was characterised by
relatively mild weather. If these conditions materialise,
we expect that demand for electricity will be stable or rise
marginally in Germany, the Netherlands and the United
Kingdom. The stimulus of expanding economies and the
possibly colder weather will be contrasted by the dampening
effects of the increasingly efficient use of energy. Similar to
2017, electricity consumption in Poland, Hungary and
Slovakia is expected to rise by between 2 % and 3 %.

We anticipate a general rise in gas usage. This is based on
assumed normalised temperatures and a commensurate
increase in the need for heating. In addition, the predicted
economic growth should stimulate demand for gas. Stimulus
may also come from the electricity generation sector, if the
market conditions for gas-fired power plants improve further.
We anticipate opposing effects from the trend towards
saving energy.

84 RWE Annual Report 2017

Earnings forecast for 2018
€ million

Adjusted EBITDA

of which:

Lignite & Nuclear

European Power

Supply & Trading

innogy

Adjusted net income

We expect earnings at the divisional level to develop as
follows:

• Lignite & Nuclear: Adjusted EBITDA is anticipated to decline
to between €350 million and €450 million. As mentioned
earlier, most of this year’s electricity generation has already
been placed on the market. In sum, the margins realised
were lower than in 2017. Moreover, the Gundremmingen B
nuclear power station will stop contributing to earnings
as we had to shut it down at the end of 2017. However,
we are confident of being able to profit from further
efficiency-enhancing measures.

• European Power: Adjusted EBITDA of this segment is

expected to total between €300 million and €400 million.
This would put it below last year’s figure, which benefited
from one-off income from property sales. Earnings
contributed by the commercial optimisation of our power
plant deployment are unlikely to match the high level
achieved in 2017. Furthermore, we anticipate declining
margins from electricity forward sales. By contrast, the
premiums that we receive for participating in the UK
capacity market will increase.

• Supply & Trading: We expect to post annual average adjusted
EBITDA in the order of €200 million in this segment over
the long term. We estimate a range of €100 million to
€300 million for 2018. This assumes a normal trading
performance. Earnings in the gas business are likely to
close the year down on the above-average figure recorded
in 2017.

2017 actual

Forecast for 2018

5,756

671

463

271

4,331

1,232

4,900 – 5,200

350 – 450

300 – 400

100 – 300

4,100 – 4,200

700 – 1,000

• innogy: Our subsidiary anticipates adjusted EBITDA of
between €4.1 billion and €4.2 billion, slightly less than
in 2017. Earnings in the retail business may well decline
considerably, in part due to rising startup costs for
future-oriented projects. Moreover, exceptional income is
likely to be lower than in 2017. This also applies to the
Grid & Infrastructure division, which is expected to close
fiscal 2018 slightly down year on year. If transit volumes
in the Czech gas distribution network return to normal
levels after the positive effect of the weather in 2017,
they may contribute to the decline in earnings. innogy
anticipates stable earnings in the field of renewable
energy. The commissioning of new generation capacity
will have a positive effect. Assuming average weather
conditions, the capacity utilisation of wind turbines and
run-of-river power stations will improve. This will be
contrasted by higher costs incurred to develop new
projects. In addition, last year’s earnings benefited from
income from the revaluation of the Triton Knoll wind
power project.

Combined review of operations > Outlook

Outlook for the RWE Group with innogy as a pure
financial investment. For management purposes, we also
use Group figures in which innogy is included as a pure
financial investment instead of as a fully consolidated
company. More detailed information on how these figures
are calculated can be found on page 60. Adjusted EBITDA in
2018 calculated taking this approach is expected to total
between €1.4 billion and €1.7 billion (last year: €2.1 billion).
The figure predicted for adjusted net income is between
€0.5 billion and €0.8 billion (last year: €1.0 billion). We expect
net debt to post a moderate rise (last year: €4.5 billion).

Capex budget subject to counter-financing measures.
Most of the capital spent in the RWE Group is attributable to
innogy. Our subsidiary plans a net capital expenditure in the
order of €2.5 billion in 2018. Gross capex exceeding this
amount will be financed with proceeds from divestments
and asset disposals. As before, the investment magnets are
the maintenance and modernisation of distribution grids and
the expansion of renewable energy. We plan to spend about
€400 million in capital on property, plant and equipment in
conventional power generation, primarily to maintain and
modernise power stations and opencast mines. Some of the
funds have been earmarked for small growth projects, e. g.
the conversion of our Dutch hard coal-fired power stations to
biomass co-firing.

Net debt probably higher year on year. Our net debt is
likely to increase moderately in the current fiscal year. A
major reason for this is the dividend payments to RWE
shareholders and co-owners of fully consolidated RWE
companies. Our forecast for net debt is based on the assumed
stability of market interest levels and – in turn – of the
discount factors that we use to calculate provisions.

Forward-looking statements. This report contains forward-looking statements regarding the future development of the RWE

Group and its companies as well as economic and political developments. These statements are assessments that we have made

based on information available to us at the time this document was prepared. In the event that the underlying assumptions do

not materialise or unforeseen risks arise, actual developments can deviate from the developments expected at present. Therefore,

we cannot assume responsibility for the correctness of these statements.

References to the internet. The contents of pages on the internet and publications to which we refer in the review of operations

are not part of the review of operations and are merely intended to provide additional information. The corporate governance

declaration in accordance with Section 289a as well as Section 315d of the German Commercial Code is an exception.

86 RWE Annual Report 2017

2 RESPONSIBILITY STATEMENT

To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated
financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of
the Group, and the Group review of operations includes a fair review of the development and performance of
the business and the position of the Group, together with a description of the principal opportunities and
risks associated with the expected development of the Group.

Essen, 26 February 2018

The Executive Board

Schmitz

Krebber

Consolidated
financial
statements

88 RWE Annual Report 2017

3.1 INCOME STATEMENT

€ million

Revenue (including natural gas tax /electricity tax)

Natural gas tax /electricity tax

Revenue

Other operating income

Cost of materials

Staff costs

Depreciation, amortisation and impairment losses

Other operating expenses

Income from investments accounted for using the equity method

Other income from investments

Financial income

Finance costs

Income before tax

Taxes on income

Income

of which: non-controlling interests

of which: RWE AG hybrid capital investors’ interest

of which: net income /income attributable to RWE AG shareholders

Basic and diluted earnings per common and preferred share in €

Note

(1)

(2)

(3)

(4)

(5), (10)

(6)

(7), (13)

(7)

(8)

(9)

(26)

2017

44,585

2,151

42,434

3,608

31,326

4,704

2,939

3,686

302

118

2,315

3,066

3,056

741

2,315

373

1,900

3.09

2016

45,833

2,243

43,590

1,435

33,397

4,777

6,647

4,323

387

153

1,883

4,111

− 5,807

− 323

− 5,484

167

− 5,710

− 9.29

Consolidated financial statements > Income statement

Statement of comprehensive income

3.2 STATEMENT OF COMPREHENSIVE INCOME

€ million1

Income

Actuarial gains and losses of defined benefit pension plans and similar obligations

Income and expenses of investments accounted for using the equity method (pro rata)

Income and expenses recognised in equity, not to be reclassified
through profit or loss

Currency translation adjustment

Fair valuation of financial instruments available for sale

Fair valuation of financial instruments used for hedging purposes

Note

(13)

(21)

(27)

Income and expenses of investments accounted for using the equity method (pro rata)

(13), (21)

Income and expenses recognised in equity, to be reclassified through
profit or loss in the future

Other comprehensive income

Total comprehensive income

of which: attributable to RWE AG shareholders

of which: attributable to RWE AG hybrid capital investors

of which: attributable to non-controlling interests

1 Figures stated after taxes.

2016

− 5,484

− 629

− 592

− 59

976

− 17

978

386

− 5,098

− 5,284

127

2017

2,315

1,346

− 85

1,261

174

818

–15

1,021

2,282

4,597

3,996

559

90 RWE Annual Report 2017

3.3 BALANCE SHEET

Assets
€ million

Non-current assets

Intangible assets

Property, plant and equipment

Investment property

Investments accounted for using the equity method

Other non-current financial assets

Financial receivables

Other receivables and other assets

Income tax assets

Deferred taxes

Current assets

Inventories

Financial receivables

Trade accounts receivable

Other receivables and other assets

Income tax assets

Marketable securities

Cash and cash equivalents

Assets held for sale

Equity and liabilities
€ million

Equity

RWE AG shareholders’ interest

RWE AG hybrid capital investors’ interest

Non-controlling interests

Non-current liabilities

Provisions

Financial liabilities

Other liabilities

Deferred taxes

Current liabilities

Provisions

Financial liabilities

Trade accounts payable

Income tax liabilities

Other liabilities

Liabilities held for sale

Note

31 Dec 2017

31 Dec 2016

(10)

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(15)

(16)

(19)

(20)

Note

(21)

(23)

(24)

(25)

(17)

(23)

(24)

(25)

12,383

24,904

2,846

1,109

359

1,187

236

2,627

12,749

24,455

2,908

1,055

403

1,175

219

2,884

45,694

45,911

1,924

1,745

5,405

4,892

445

4,893

3,933

128

23,365

69,059

1,968

1,471

4,999

7,418

234

9,825

4,576

30,491

76,402

31 Dec 2017

31 Dec 2016

6,759

940

4,292

11,991

19,249

14,414

2,393

718

36,774

5,137

2,787

5,077

100

7,082

111

20,294

69,059

2,754

942

4,294

7,990

20,686

16,041

2,196

723

39,646

12,175

2,142

5,431

131

8,887

28,766

76,402

Note (30)

Consolidated financial statements > Balance sheet

Cash flow statement

3.4 CASH FLOW STATEMENT

€ million

Income

Depreciation, amortisation, impairment losses /write-backs

Changes in provisions

Changes in deferred taxes

Income from disposal of non-current assets and marketable securities

Other non-cash income /expenses

Changes in working capital

Cash flows from operating activities

Intangible assets /property, plant and equipment /investment property

Capital expenditure

Proceeds from disposal of assets

Acquisitions, investments

Capital expenditure

Proceeds from disposal of assets /divestitures

Changes in marketable securities and cash investments

Cash flows from investing activities (before initial /subsequent transfer to plan assets)

Initial /subsequent transfer to plan assets

Cash flows from investing activities (after initial /subsequent transfer to plan assets)

Net change in equity (incl. non-controlling interests)

Dividends paid to RWE AG shareholders and non-controlling interests

Issuance of financial debt

Repayment of financial debt

Cash flows from financing activities

Net cash change in cash and cash equivalents

Effects of changes in foreign exchange rates and other changes in value on cash and
cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of the reporting period

of which: reported as ‘Assets held for sale’

Cash and cash equivalents at beginning of the reporting period as per the consolidated
balance sheet

Cash and cash equivalents at the end of the reporting period

of which: reported as ‘Assets held for sale’

Cash and cash equivalents at end of the reporting period as
per the consolidated balance sheet

2016

− 5,484

6,670

2,043

− 1,136

− 227

1,147

− 661

2,352

− 2,027

238

− 281

527

− 2,587

− 4,130

− 440

− 4,570

4,514

− 407

5,732

− 5,557

4,282

2,064

− 24

2,040

2,536

− 14

2,522

4,576

2017

2,315

2,583

− 7,045

− 267

830

–209

− 1,754

− 2,235

324

− 345

162

4,975

2,881

− 190

2,691

− 64

− 603

3,996

− 4,865

− 1,536

– 599

–19

–618

4,576

3,958

− 25

3,933

92 RWE Annual Report 2017

3.5 STATEMENT OF CHANGES IN EQUITY

Statement of changes
in equity

€ million

Sub-
scribed
capital
of RWE AG

Addi-
tional
paid-in
capital of
RWE AG

Retained
earnings
and
distribut-
able profit

Note (21)

Accumulated other
Comprehensive Income

Currency
trans-
lation
adjust-
ments

Fair value measure-
ment of financial
instruments

Available
for sale

Used for
hedging
purposes

RWE AG
share-
holders’
interest

RWE AG
hybrid
capital
investors’
interest

Total

Non-con-
trolling
interests

Balance at 1 Jan 2016

1,574

2,385

3,612

− 1,751

5,847

950

Capital paid in

Dividends paid1

Income

Other comprehensive
income

Total comprehensive
income

Other changes

Balance at 31 Dec 2016

1,574

2,385

Capital paid out

Dividends paid1

Income

Other comprehensive
income

Total comprehensive
income

Other changes

− 5

− 5,710

− 745

− 6,455

2,196

− 652

− 5

1,900

1,110

3,010

160

165

139

Balance at 31 Dec 2017

1,574

2,385

2,367

304

1 Following reclassification of non-controlling interests to other liabilities as per IAS 32.

− 5

− 5,710

− 67

974

426

974

− 5,284

− 777

2,196

2,754

− 5

1,900

942

− 60

2,097

1,948

− 250

8,894

1,948

− 322

167

− 5,484

− 40

127

372

4,294

− 45

− 480

373

386

− 5,098

2,568

7,990

− 45

− 545

2,315

813

2,096

186

2,282

813

3,996

6,759

940

559

− 36

4,597

− 6

4,292

11,991

Consolidated financial statements > Statement of changes in equity

Notes

3.6 NOTES

Basis of presentation

RWE AG, headquartered at Huyssenallee 2, 45128 Essen, Germany,

These consolidated financial statements were prepared for the fiscal

is the parent company of the RWE Group (‘RWE’ or ‘Group’). RWE is

year from 1 January to 31 December 2017.

a supplier of electricity and natural gas in Europe.

The consolidated financial statements for the period ended 31 De-

completeness and accuracy of the consolidated financial statements

cember 2017 were approved for publication on 26 February 2018

and the Group review of operations, which is combined with the

The Executive Board of RWE AG is responsible for the preparation,

by the Executive Board of RWE AG. The statements were prepared in

review of operations of RWE AG.

accordance with the International Financial Reporting Standards

(IFRSs) applicable in the EU, as well as in accordance with the supple-

We employ internal control systems, uniform groupwide directives,

mentary accounting regulations applicable pursuant to Sec. 315e,

and programmes for basic and advanced staff training to ensure

Para. 1 of the German Commercial Code (HGB). The previous year’s

that the consolidated financial statements and combined review of

figures were calculated according to the same principles.

operations are adequately prepared. Compliance with legal regula-

tions and the internal guidelines as well as the reliability and viabili-

A statement of changes in equity has been disclosed in addition to

ty of the control systems are continuously monitored throughout

the income statement, the statement of comprehensive income, the

the Group.

balance sheet and the cash flow statement. The Notes also include
segment reporting.

In line with the requirements of the German Corporate Control and

Transparency Act (KonTraG), the Group’s risk management system

Several balance sheet and income statement items have been

enables the Executive Board to identify risks at an early stage and

com bined in the interests of clarity. These items are stated and

take countermeasures, if necessary.

explained separately in the Notes to the financial statements.

The income statement is structured according to the nature of

The consolidated financial statements, the combined review of oper-

expense method.

ations, and the independent auditors’ report are discussed in detail

by the Audit Committee and at the Supervisory Board’s meeting on

The consolidated financial statements have been prepared in euros.

financial statements with the independent auditors present. The

Unless specified otherwise, all amounts are stated in millions of

results of the Supervisory Board’s examination are presented in the

euros (€ million). Due to calculation procedures, rounding differences

report of the Supervisory Board on page 8 et seqq.

may occur.

94 RWE Annual Report 2017

Scope of consolidation

In addition to RWE AG, the consolidated financial statements con-

Furthermore, six companies are presented as joint operations (pre-

tain all material German and foreign companies which RWE AG con-

vious year: six). Of these, Greater Gabbard Offshore Winds Limited,

trols directly or indirectly. In determining whether there is control,

UK, is a material joint operation of the RWE Group. Greater Gabbard

in addition to voting rights, other rights in the company contracts or

holds a 500 MW offshore wind farm, which innogy operates together

articles of incorporation and potential voting rights are also taken

with Scottish and Southern Energy (SSE) Renewables Holdings.

into consideration.

Innogy Renewables UK owns 50 % of the shares and receives 50 %

of the power generated (including green power certificates). The

Material associates are accounted for using the equity method, and

wind farm is a key element in the offshore portfolio of the segment

principal joint arrangements are accounted for using the equity

innogy.

method or as joint operations. Joint operations result in pro-rata

inclusion of the assets and liabilities, and the revenues and expenses,

First-time consolidation and deconsolidation generally take place

in accordance with the rights and obligations due to RWE.

when control is transferred.

A company is deemed to be an associate if there is significant influ-

In total, sales of shares which led to a change of control resulted in

ence on the basis of voting rights between 20 % and 50 % or on the

sales proceeds from disposals amounting to €19 million, which

basis of contractual agreements. In classifying joint arrangements
which are structured as independent vehicles, as joint operations,

were reported in other operating income and other operating expens-
es (previous year: €62 million). Of this, €14 million (previous year:

or as joint ventures, other facts and circumstances – in particular

€8 million) pertained to the remeasurement of remaining shares.

delive ry relationships between the joint arrangement and the parties

participating in such – are taken into consideration, in addition to

Within the framework of purchases and sales of subsidiaries and

legal form and the contractual agreements.

other business units which resulted in a change of control, purchase

prices amounted to €159 million (previous year: €55 million) and

Investments in subsidiaries, joint ventures, joint operations or asso-

sales prices amounted to €5 million (previous year: €84 million).

ciates which are of secondary importance from a Group perspective

All sales prices were paid in cash. The purchase prices amounted to

are accounted for in accordance with IAS 39.

€134 million and were paid in cash; €25 million in liabilities were

assumed. In relation to this, cash and cash equivalents (excluding

The list of Group shareholdings pursuant to Sec. 313, Para. 2 of the

‘Assets held for sale’) were acquired in the amount of €25 million

German Commercial Code (HGB) is presented on page 153 et seqq.

(previous year: €0 million) and were disposed of in the amount of

€5 million (previous year: €1 million).

The following summaries show the changes in the number of fully-

consolidated companies, investments accounted for using the equity

Acquisitions

method, and joint ventures:

Number of fully
consolidated companies

1 Jan 2017

First-time consolidation

Deconsolidation

Mergers

31 Dec 2017

Number of investments and joint
ventures accounted for using the
equity method

1 Jan 2017

Acquisitions

Other changes

31 Dec 2017

Germany

Abroad

Total

Belectric
At the beginning of January 2017, innogy SE acquired a 100 % stake

in Belectric Solar & Battery GmbH and gained control of the company.

135

180

315

The company constructs turnkey solar farms and battery storage

facilities. Furthermore, it is active in the operation and maintenance

(O&M) of solar farms.

– 2

– 6

– 1

– 2

– 3

– 8

142

199

341

Germany

Abroad

Total

– 1

Consolidated financial statements > Notes

The initial accounting of the business combination is presented in

The assets and liabilities assumed within the scope of the first-time

the following table together with the assumed assets and liabilities:

consolidation are presented in the following table:

Balance-sheet items

€ million

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Net assets

Cost

Goodwill

IFRS carrying amounts
(fair value) at first-time
consolidation

Balance-sheet items

€ million

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Net assets

Cost

Goodwill

IFRS carrying amounts
(fair value) at first-time
consolidation

174

The fair value of the receivables included in non-current and current

The fair value of the total consideration paid for the acquisition of

assets amounted to €24 million and corresponded to the gross
amount of the receivables that are fully recoverable.

Statkraft’s 50 % stake on the date of acquisition was €47 million.
The fair value of the old shares amounted to €47 million. As a result,

a total of €94 million was recognised as a cost within the scope of

Since its first-time consolidation, the company has contributed

the initial consolidation.

€204 million to the Group’s revenue and – €11 million to the Group’s

income.

The fair value of the receivables included in non-current and current

The purchase price amounted to €74 million and included a condi-

tional payment obligation of €7 million, cash and cash equivalents of

Since its first-time consolidation, the company has contributed

€49 million and assumed liabilities of €18 million. The conditional

€0 million to the revenue and – €1 million to the income of the

assets amounted to €2 million.

payment obligation depends on the occurrence of legal and tax risks

Group.

and can lead to a nominal payment of between €0 and a maximum

of €7 million, which would bear an interest rate equivalent to EURIBOR

The goodwill essentially reflects expected future benefits and

plus 3 %.

synergy effects.

The goodwill essentially reflects expected future benefits and

The initial accounting of the business combination has not yet been

synergy effects.

completed definitively due to the transaction’s complex structure.

Offshore wind project
In October 2017, innogy SE gained control of Great Britain-based

If all of the business combinations in the period under review had

already been completed by 1 January 2017, the Group’s income and

Triton Knoll Offshore Wind Farm Limited, which was previously in-

revenue would total €2,317 million and €44,599 million, respectively.

cluded in the consolidated financial statements using the equity

method. Having acquired Statkraft’s 50 % interest, innogy SE is now

the sole owner of Triton Knoll – an offshore wind project with a

planned capacity of 860 megawatts.

Assets held for sale and disposal groups

The fair value of the old shares amounted to €47 million. The first-

Mátra
In the middle of December 2017, RWE Power sold Hungary-based

time consolidation of Triton Knoll and the associated change in the

Mátrai Erőmű Zrt. (Mátra) to a consortium. Mátra is assigned to the

status of the old shares resulted in income of €47 million, which

Lignite & Nuclear segment. The transaction is subject to approval

has been recognised as ‘other operating income’ on the income

from the relevant antitrust authorities and the Hungarian Energy

statement.

Authority. It is expected to be completed in the first quarter of 2018.

96 RWE Annual Report 2017

As of 31 December 2017, the assets and liabilities of this company

presented in the following table were stated as held for sale on the

Consolidation principles

balance sheet.

Balance-sheet items
€ million

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Net assets

IFRS carrying amounts
(fair value)

101

The financial statements of German and foreign companies included

in the scope of the Group’s financial statements are prepared using

uniform accounting policies. On principle, subsidiaries whose fiscal

years do not end on the Group’s balance-sheet date (31 December)

prepare interim financial statements as of this date. Three subsidiaries

have a different balance-sheet date of 31 March (previous year: one).

Different fiscal years compared to the calendar year stem from

tax-related reasons or country-specific regulations.

Business combinations are reported according to the acquisition

method. This means that capital consolidation takes place by offset-

ting the purchase price, including the amount of the non-controlling

€301 million in impairment losses were recognised in depreciation

interests, against the acquired subsidiary’s revalued net assets at

and amortisation. Furthermore, €12 million from the valuation of

the time of acquisition. In doing so, the non-controlling interests can

assets and liabilities held for sale were recognised in other operating

either be measured at the prorated value of the subsidiary’s identi-

income.

fiable net assets or at fair value. The subsidiary’s identifiable assets,
liabilities and contingent liabilities are measured at full fair value,

Income and expenses directly recognised in equity (accumulated

regard less of the amount of the non-controlling interests. Intangible

other comprehensive income) amounted to €47 million as of the

assets are reported separately from goodwill if they are separable

balance-sheet date.

Other disposals

Residential property management companies
Per a purchase agreement dated 9 February 2017, RWE Power AG

from the company or if they stem from a contractual or other right.

In accordance with IFRS 3, no new restructuring provisions are

recogni sed within the scope of the purchase price allocation. If the

purchase price exceeds the revalued prorated net assets of the

acquir ed subsidiary, the difference is capitalised as goodwill. If the

purchase price is lower, the difference is included in income.

sold its 50 % stake in Wohnungsbaugesellschaft für das Rheinische

In the event of deconsolidation, the related goodwill is derecognised

Braunkohlenrevier Gesellschaft mit beschränkter Haftung and its

with an effect on income. Changes in the ownership share which

15 % stake in GSG Wohnungsbau Braunkohle GmbH to Vivawest

do not alter the ability to control the subsidiary are recognised with-

GmbH. The sale led to total proceeds in the medium double-digit

out an effect on income. By contrast, if there is a change in control,

million euro range. The investments had been assigned to the

the remaining shares are revalued with an effect on income.

Lignite & Nuclear segment.

Hamborn 5 CCGT power station
RWE Generation sold the Hamborn 5 CCGT power station to thyssen-

krupp Steel Europe (TKSE) with effect from 31 May 2017. Legal

Expenses and income as well as receivables and payables between

consolidated companies are eliminated; intra-group profits and loss-

es are eliminated.

owner ship of the CCGT leased and operated by TKSE was thus trans-

For investments accounted for using the equity method, goodwill is

ferred as well. The asset was assigned to the European Power seg-

not reported separately, but rather included in the value recognised

ment within the RWE Group.

for the investment. In other respects, the consolidation principles

described above apply analogously. If impairment losses on the equi ty

Properties
At the end of July 2017, we reached an agreement with Tritax Big

value become necessary, we report such under income from invest-

ments accounted for using the equity method. The financial state-

Box REIT plc that it would purchase most of the site of our former

ments of investments accounted for using the equity method are

power station Littlebrook. The transaction became effective in the

prepared using uniform accounting policies.

middle of September 2017. A smaller part of the site was sold to the

transmission system operator National Grid. This transaction was

completed at the beginning of August. The land sales resulted in

total euro proceeds in the upper double-digit million range. The

former power plant site is assigned to the European Power segment

within the RWE Group.

Consolidated financial statements > Notes

For joint operations, the assets and liabilities and the expenses and

Functional foreign currency translation is applied when converting

income of the companies which are attributable to RWE are report-

the financial statements of companies outside of the Eurozone. As

ed. In the event that RWE’s shareholding differs from the share of

the principal foreign enterprises included in the consolidated finan-

the output from the activity to which RWE is entitled (share of out-

cial statements conduct their business activities independently in

put), the assets, liabilities, expenses and revenue are recognised in

their national currencies, their balance-sheet items are translated

accordance with the share of output.

Foreign currency translation

into euros in the consolidated financial statements using the aver-

age exchange rate prevailing on the balance-sheet date. This also

applies for goodwill, which is viewed as an asset of the economically

autonomous foreign entity. We report differences to previous-year

translations in other comprehensive income without an effect on

In their individual financial statements, the companies measure non-

income. Expense and income items are translated using annual aver-

monetary foreign currency items at the balance-sheet date using the

age exchange rates. When translating the adjusted equity of foreign

exchange rate in effect on the date they were initially recognised.

companies accounted for using the equity method, we follow the

Monetary items are converted using the exchange rate valid on the

same procedure.

balance-sheet date. Exchange rate gains and losses from the measure-

ment of monetary balance-sheet items in foreign currency occurring

The following exchange rates (among others) were used as a basis

up to the balance-sheet date are recognised on the income statement.

for foreign currency translations:

Exchange rates
in €

1 US dollar

1 pound sterling

100 Czech korunas

100 Hungarian forints

1 Polish zloty

Accounting policies

Average

Year-end

2017

0.88

1.14

3.80

0.32

0.24

2016

0.91

1.22

3.70

0.32

0.23

31 Dec 2017

31 Dec 2016

0.83

1.13

3.92

0.32

0.24

0.95

1.17

3.70

0.32

0.23

Intangible assets are accounted for at amortised cost. With the
exception of goodwill, all intangible assets have finite useful lives

market it. Furthermore, asset recognition requires that there be a

sufficient level of certainty that the development costs lead to future

and are amortised using the straight-line method. Useful lives and

cash inflows. Capitalised development costs are amortised over

methods of amortisation are reviewed on an annual basis.

the time period during which the products are expected to be sold.

Research expenditures are recognised as expenses in the period in

Software for commercial and technical applications is amortised

which they are incurred.

over three to five years. ‘Operating rights’ refer to the entirety of

the permits and approvals required for the operation of a power

An impairment loss is recognised for an intangible asset if the recov-

plant. Such rights are generally amortised over the economic life of

erable amount of the asset is less than its carrying amount. A special

the power plant, using the straight-line method. Easement agree-

regulation applies for cases when the asset is part of a cash-generating

ments in the electricity and gas business, and other easement rights,

unit. Such units are defined as the smallest identifiable group

usually have useful lives of 20 years. Concessions in the water busi-

of assets which generates cash inflows; these inflows must be largely

ness generally have terms of up to 25 years. Capitalised customer

independent of cash inflows from other assets or groups of assets.

relations are amortised over a maximum period of up to ten years.

If the intangible asset is a part of a cash-generating unit, the impair-

Goodwill is not amortised; instead it is subjected to an impairment

If goodwill was allocated to a cash-generating unit and the carrying

test once every year, or more frequently if there are indications of

amount of the unit exceeds the recoverable amount, the allocated

ment loss is calculated based on the recoverable amount of this unit.

impairment.

goodwill is initially written down by the difference. Impairment losses

which must be recognised in addition to this are taken into account

Development costs are capitalised if a newly developed product or

by reducing the carrying amount of the other assets of the cash-

process can be clearly defined, is technically feasible and it is the

generating unit on a prorated basis. If the reason for an impairment

company’s intention to either use the product or process itself or

loss recognised in prior periods has ceased to exist, a write-back to

98 RWE Annual Report 2017

intangible assets is performed. The increased carrying amount re-

Impairment losses and write-backs on property, plant and equip-

sulting from the write-back may not, however, exceed the amortised

ment are recognised according to the principles described for

cost. Impairment losses on goodwill are not reversed.

intangib le assets.

Property, plant and equipment is stated at depreciated cost. Bor-
rowing costs are capitalised as part of the asset’s cost, if they are

Investment property consists of all real property held to earn rental
income or for long-term capital appreciation rather than for use in

incurred directly in connection with the acquisition or production of

production or for administrative purposes. This property is measured

a ‘qualified asset’. What characterises a qualified asset is that a

at depreciated cost. Transaction costs are also included in the initial

considerable period of time is required to prepare it for use or sale. If

measurement. Depreciable investment property is de preciated over

necessary, the cost of property, plant and equipment may contain

16 to 50 years using the straight-line method. Fair values of invest-

the estimated expenses for the decommissioning of plants or site

ment property are stated in the Notes and are determined using

restoration. Maintenance and repair costs are recognised as expenses.

internationally accepted valuation methods such as the discounted

cash flow method or are derived from the current market prices of

With the exception of land and leasehold rights, as a rule, property,

comparable real estate.

plant and equipment is depreciated using the straight-line method,

unless in exceptional cases another depreciation method is better

Impairment losses and write-backs for investment property are also

suited to the usage pattern. We calculate the depreciation of RWE’s

recognised according to the principles described for intangible assets.

typical property, plant and equipment according to the following
useful lives, which apply throughout the Group:

Useful life in years

Buildings

Technical plants

Thermal power plants

Wind turbines

Electricity grids

Water main networks

Gas and water storage facilities

Gas distribution facilities

Mining facilities

Mining developments

Other renewable generation facilities

Investments accounted for using the equity method are initially
accounted for at cost and thereafter based on the carrying amount

of their prorated net assets. The carrying amounts are increased

or reduced annually by prorated profits or losses, dividends and all

9 – 54

other changes in equity. Goodwill is not reported separately, but

10 – 60

up to 23

20 – 45

10 – 80

10 – 60

10 – 40

3 – 25

44 – 52

4 – 40

rather included in the recognised value of the investment. Goodwill

is not amortised. An impairment loss is recognised for investments

accounted for using the equity method, if the recoverable amount

is less than the carrying amount.

Other financial assets are comprised of shares in non-consolidated
subsidiaries and in associates /joint ventures not accounted for using

the equity method, as well as other investments and non-current

marketable securities. These assets are shown in the category ‘Avail-

able for sale’. This category includes financial instruments which

are neither loans or receivables, nor financial investments held to ma-

turity, and which are not measured at fair value through profit or

loss. Upon recognition and in the following periods, they are recorded

Property, plant and equipment held under a finance lease is capital-

at fair value as long as such can be de termined reliably. Initial meas-

ised at the fair value of the leased asset or the present value of the

urement occurs as of the settlement date. Unrealised gains and losses

minimum lease payments, depending on which is lower. They are

are stated as other comprehensive income, with due consideration of

depreciated using the straight-line method over the expected useful

any deferred taxes. Gains or losses are recognised on the income

life or the lease term, whichever is shorter.

statement upon sale of the finan cial instruments. If there are objec-

For operating leasing transactions, in which RWE is the lessee, the

impairment loss is recognised with an effect on income. Such indica-

minimum leasing payments are recognised as an expense over the

tions can be that there is no longer an active market for a financial

term of the lease. If RWE is the lessor, the minimum leasing payments

asset or that a debtor is ex periencing significant financial difficulties,

are recognised as income over the term of the lease.

or is possibly delinquent on payments of interest and principal.

tive, material indications of a reduction in the value of an asset, an

Consolidated financial statements > Notes

Receivables are comprised of financial receivables, trade accounts
receivable and other receivables. Aside from financial derivatives,
receivables and other assets are stated at amortised cost. Allow-
ances for doubtful accounts are based on the actual default risk.

If the net realisable value of inventories written down in earlier peri-

ods has increased, the reversal of the write-down is recognised as a

reduction of the cost of materials.

As a rule, the amounts of receivables are corrected through the use

Nuclear fuel assemblies are stated at depreciated cost. Depreciation

of an allowance account, in accordance with internal Group guide-

is determined by operation and capacity, based on consumption

lines. Prepayments received from customers for consumption which

and the reactor’s useful life.

is yet to be metered and billed are netted out against trade accounts

receivab le of the utilities.

Inventories which are acquired primarily for the purpose of realising

a profit on a short-term resale transaction are recognised at fair

Loans reported under financial receivables are stated at amortised

value less costs to sell. Changes in value are recognised with an effect

cost. Loans with interest rates common in the market are shown on

on income.

the balance sheet at nominal value; as a rule, however, non-interest

or low-interest loans are disclosed at their present value discounted

using an interest rate commensurate with the risks involved.

CO2 emission allowances and certificates for renewable energies
are accounted for as intangible assets and reported under other
assets. Allowances which are purchased and allowances allocated

Securities classified as current marketable securities essentially
consist of marketable securities held in special funds as well as fixed-

interest securities which have a maturity of more than three months

and less than one year from the date of acquisition. All of these se-

curities are classified as ‘Available for sale’ and are stated at fair
value. The transaction costs directly associated with the acqui sition

free of charge are both stated at cost and are not amortised.

of these securities are included in the initial measurement, which

occurs on their settlement date. Unrealised gains and losses are in-

Deferred taxes result from temporary differences in the carrying
amount in the separate IFRS financial statements and tax bases,

cluded in other comprehensive income without an effect on income,

with due consideration of any deferred taxes. If there are objective,

and from consolidation procedures. Deferred tax assets also include

material indications of a reduction in value, an impairment loss is

tax reduction claims resulting from the expected utilisation of ex-

recognised with an effect on income. The results of sales of securi-

isting loss carryforwards in subsequent years. Deferred taxes are

ties are also recognised on the income statement.

capitalised if it is sufficiently certain that the related economic

advantages can be used. Their amount is assessed with regard to the

tax rates applicable or expected to be applicable in the specific

Cash and cash equivalents consist of cash on hand, demand de-
posits and current fixed-interest securities with a maturity of three

country at the time of realisation. The tax regulations valid or adopted

months or less from the date of acquisition.

as of the balance-sheet date are key considerations in this regard.

Deferred tax assets and deferred tax liabilities are netted out for

each company and /or tax group.

Inventories are assets which are held for sale in the ordinary course
of business (finished goods and goods for resale), which are in the

process of production (work in progress – goods and services) or which

are consumed in the production process or in the rendering of ser-

vices (raw materials including nuclear fuel assemblies and excavated

earth for lignite mining).

Assets are stated under Assets held for sale if they can be sold in
their present condition and their sale is highly probable. Such assets

may be certain non-current assets, asset groups (‘disposal groups’)

or operations (‘discontinued operations’). Liabilities intended to be

sold in a transaction together with assets are a part of a disposal

group or discontinued operations, and are reported separately under
Liabilities held for sale.

Non-current assets held for sale are no longer depreciated or amor-

tised. They are recognised at fair value less costs to sell, as long as

Insofar as inventories are not acquired primarily for the purpose of

this amount is lower than the carrying amount.

realising a profit on a short-term resale transaction, they are carried

at the lower of cost or net realisable value. Production costs reflect

the full costs directly related to production; they are determined based

on normal capacity utilisation and, in addition to directly allocab le

costs, they also include adequate portions of required mate rials and

production overheads. They also include production- related depre-

ciation. Borrowing costs, however, are not capitalised as part of the

cost. The determination of cost is generally based on average values.

The usage of excavated earth for lignite mining is calculated using

the ‘first in – first out’ method (FIFO).

100 RWE Annual Report 2017

Gains or losses on the valuation of specific assets held for sale and

vious year, for Germany, in particular the ‘Richttafeln 2005 G’ by

of disposal groups are stated under income from continuing opera-

Klaus Heubeck, and the Standard SAPS Table S2PA of the current

tions until final completion of the sale.

year for the United Kingdom, taking into consideration future chang-

The stock option plans are accounted for as cash-settled share-based
payment. At the balance-sheet date, a provision is recognis ed in the
amount of the prorated fair value of the payment obligation. Changes

in the fair value are recognised with an effect on income. The fair

es in mortality rates). The provision derives from the balance of the

actuarial present value of the obligations and the fair value of the

plan assets. The service cost is disclosed in staff costs. Net interest

is included in the financial result.

value of options is determined using generally accepted valuation

Gains and losses on the revaluation of net debt or net assets are

methodologies.

Provisions are recognised for all legal or constructive obligations
to third parties which exist on the balance-sheet date and stem from

fully recognised in the fiscal year in which they occur. They are re-

ported outside of profit or loss, as a component of other comprehen-

sive income in the statement of comprehensive income, and are

immediately assigned to retained earnings. They remain outside profit

past events which will probably lead to an outflow of resources,

or loss in subsequent periods as well.

and the amount of which can be reliably estimated. Provisions are

carried at their prospective settlement amount and are not offset

In the case of defined contribution plans, the enterprise’s obligation

against reimbursement claims. If a provision involves a large number

is limited to the amount it contributes to the plan. Contributions to

of items, the obligation is estimated by weighting all possible out-
comes by their probability of occurrence (expected value method).

the plan are reported under staff costs.

All non-current provisions are recognised at their prospective settle-

on obligations under public law, in particular the German Atomic

ment amount, which is discounted as of the balance-sheet date. In

Energy Act and the Disposal Fund Act, and on restrictions from oper-

the determination of the settlement amount, any cost increases like-

ating licenses. These provisions are measured using estimates, which

ly to occur up until the time of settlement are taken into account.

are based on and defined in contracts, on information from internal

Waste management provisions in the nuclear energy sector are based

and external specialists (e.g. experts).

If necessary, the cost of property, plant and equipment may contain

the estimated expenses for the decommissioning of plants or site

Obligations existing as of the balance-sheet date and identifiable

restoration. Decommissioning, restoration and similar provisions are

when the balance sheet is being prepared are recognised as provi-

recognised for these expenses. If changes in the discount rate or

sions for mining damage to cover land recultivation and remediation

changes in the estimated timing or amount of the payments result in

of mining damage that has already occurred or been caused. The

changes in the provisions, the carrying amount of the respective

provisions must be recognised due to obligations under public law,

asset is increased or decreased by the corresponding amount. If the

such as the German Federal Mining Act, and formulated, above all,

decrease in the provision exceeds the carrying amount, the excess

in operating schedules and water law permits. Provisions are gener-

is recognised immediately through profit or loss.

ally fully related to the degree of mining in question. Such provi-

sions are measured at full ex pected cost or according to estimated

As a rule, releases of provisions are credited to the expense account

compensation payments. Cost estimates are based on external

on which the provision was originally recognised.

expert opinions to a significant extent.

Provisions for pensions and similar obligations are recognised for

defined benefit plans. These are obligations of the company to pay

future and ongoing post-employment benefits to entitled current

and former employees and their surviving dependents. In particular,

the obligations refer to retirement pensions. Individual commit-

A provision is recognised to cover the obligation to submit CO2
emission allowances and certificates for renewable energies to the

respective authorities; this provision is measured at the carrying
amount of the CO2 allowances or certificates for renewable energies
capitalised for this purpose. If a portion of the obligation is not

ments are generally oriented to the employees’ length of service

covered with the available allowances, the provision for this portion

and compensation.

is measured using the market price of the emission allowances or

certificates for renewable energies on the reporting date.

Provisions for defined benefit plans are based on the actuarial pres-

ent value of the respective obligation. This is measured using the

projected unit credit method. This method not only takes into account

the pension benefits and benefit entitlements known as of the

balance- sheet date, but also anticipated future increases in salaries

and pension benefits. The calculation is based on actuarial reports,

taking into account appropriate biometric parameters (as in the pre-

Consolidated financial statements > Notes

101

Liabilities consist of financial liabilities, trade accounts payable,
income tax liabilities and other liabilities. Upon initial recognition,
these are stated at fair value including transaction costs and are

the amounts that were recognised in equity until this point in time

are recognised on the income statement in the period during which

the asset or liability affects the income statement. If the transac-

carried at amortised cost in the periods thereafter (except for deriva-

tions result in the recognition of non-financial assets or liabilities,

tive financial instruments). Liabilities from finance lease agree-

for example the acquisition of property, plant and equipment,

ments are either measured at the fair value of the leased asset or the

the amounts recognised in equity without an effect on income are

present value of minimum lease payments, depending on which

included in the initial cost of the asset or liability.

amount is lower. For subsequent measurements, the minimum lease

payments are divided into the financ ing costs and repayment portion

The purpose of hedges of a net investment in foreign operations is

of the outstanding debt. Financ ing costs are distributed over the

to hedge the currency risk from investments with foreign functional

term of lease in such a manner that a steady interest rate is created

currencies. Unrealised gains and losses from such hedges are rec-

for the outstanding debt.

ognised in other comprehensive income until disposal of the foreign

Other liabilities include advances and contributions in aid of con-

operation.

struction and building connection that are carried as liabilities by

IAS 39 stipulates the conditions for the recognition of hedging

the utilities and are generally amortised and included in income over

relatio nships. Amongst other things, the hedging relationship must

the useful life of the corresponding asset.

be documented in detail and be effective. According to IAS 39, a

Furthermore, certain non-controlling interests are also included in

hedging relationship is effective when the changes in the fair value
of the hedging instrument are within 80 % to 125 %, both prospec-

other liabilities. Specifically, this pertains to purchase price obliga-

tively and retrospectively, of the opposite change in the fair value

tions from rights to tender non-controlling interests (put options).

of the hedged item. Only the effective portion of a hedge is recog-

Derivative financial instruments are recognised as assets or liabili-
ties and measured at fair value, regardless of their purpose. Changes

in this value are recognised with an effect on income, unless the

nised in accordance with the preceding rules. The ineffective portion

is recognis ed immediately on the income statement with an effect

on income.

instruments are used for hedge accounting purposes. In such cases,

Contracts on the receipt or delivery of non-financial items in accord-

recognition of changes in the fair value depends on the type of

ance with the company’s expected purchase, sale or usage require-

hedging transaction.

ments (own-use contracts) are not accounted for as derivative finan-

cial instruments, but rather as executory contracts. If the contracts

Fair value hedges are used to hedge assets or liabilities carried on

contain embedded derivatives, the derivatives are accounted sepa-

the balance sheet against the risk of a change in their fair value. The

rately from the host contract, insofar as the economic characteristics

following applies: changes in the fair value of the hedging instru-

and risks of the embedded derivatives are not closely related to the

ment and the fair value of the respective underlying transactions are

economic characteristics and risks of the host contract. Written op-

recognised in the same line item on the income statement. Hedges

tions to buy or sell a non-financial item which can be settled in cash

of unrecognised firm commitments are also recognised as fair value

are not own-use contracts.

hedges. Changes in the fair value of the firm commitments with re-

gard to the hedged risk result in the recognition of an asset or liabili ty

with an effect on income.

Contingent liabilities are possible obligations to third parties or
existing obligations which will probably not lead to an outflow of

economic benefits or the amount of which cannot be measured

Cash flow hedges are used to hedge the risk of variability in cash

reliab ly. Contingent liabilities are only recognised on the balance

flows related to an asset or liability carried on the balance sheet or

sheet, if they were assumed within the framework of a business

related to a highly probable forecast transaction. If a cash flow

combination. The amounts disclosed in the Notes correspond to the

hedge exists, unrealised gains and losses from the hedging instru-

exposure at the balance-sheet date.

ment are initially stated as other comprehensive income. Such

gains or losses are only included on the income statement when the

hedged underlying transaction has an effect on income. If forecast

transactions are hedged and such transactions lead to the recogni-

tion of a financial asset or financial liability in subsequent periods,

102 RWE Annual Report 2017

Management judgements in the application of accounting
policies. Management judgements are required in the application
of accounting policies. In particular, this pertains to the following

Deferred tax assets are recognised if realisation of future tax bene-

fits is probable. Actual future development of income for tax pur-

poses and hence the realisability of deferred tax assets, however,

aspects:

may deviate from the estimation made when the deferred taxes are

• With regard to certain contracts, a decision must be made as to

capitalised.

whether they are to be treated as derivatives or as so-called own-

Further information on the assumptions and estimates upon which

use contracts, and be accounted for as executory contracts.

these consolidated financial statements are based can be found in

• Financial assets must be allocated to the categories ‘Held to

the explanations of the individual items.

maturi ty investments’, ‘Loans and receivables’, ‘Financial assets

available for sale’, and ‘Financial assets at fair value through

All assumptions and estimates are based on the circumstances and

profit or loss’.

forecasts prevailing on the balance-sheet date. Furthermore, as of the

• With regard to ‘Financial assets available for sale’, a decision

balance-sheet date, realistic assessments of overall economic condi-

must be made as to if and when reductions in value are to be

tions in the sectors and regions in which RWE conducts ope rations are

recognised as impairments with an impact on income.

taken into consideration with regard to the prospective development

• With regard to assets held for sale, it must be determined if they

of business. Actual amounts may deviate from the estima ted amounts

can be sold in their current condition and if the sale of such is

if the overall conditions develop differently than expected. In such

highly probable. If both conditions apply, the assets and any
related liabilities must be reported and measured as ‘Assets

cases, the assumptions, and, if necessary, the carrying amounts of
the affected assets and liabilities are adjusted.

held for sale’ or ‘Liabilities held for sale’, respectively.

Management estimates and judgements. Preparation of consoli-
dated financial statements pursuant to IFRS requires assumptions

and estimates to be made, which have an impact on the recognised

As of the date of preparation of the consolidated financial state-

ments, it is not presumed that there will be any material changes

compared to the assumptions and estimates.

value of the assets and liabilities carried on the balance sheet, on

income and expenses and on the disclosure of contingent liabilities.

Capital management. The focus of RWE’s financing policy is on
ensuring uninterrupted access to the capital market, in order to

Amongst other things, these assumptions and estimates relate to

the accounting and measurement of provisions. With regard to

non-current provisions, the discount factor to be applied is an impor-

tant estimate, in addition to the amount and timing of future cash

flows. The discount factor for pension obligations is determined

on the basis of yields on high quality, fixed-rate corporate bonds

on the financial markets as of the balance-sheet date.

The impairment test for goodwill and non-current assets is based on

certain assumptions pertaining to the future, which are regularly

adjusted. Property, plant and equipment is tested for indications of

impair ment on each cut-off date.

Power plants are grouped together as a cash-generating unit if their

production capacity and fuel needs are centrally managed as part of

a portfolio, and it is not possible to ascribe individual contracts and

cash flows to the specific power plants.

enable the efficient refinancing of maturing debts at all times. This
goal is pursued by maintaining a solid rating and by targeting
positive operating cash flow.

During the reporting period, RWE’s capital structure changed signifi-
cantly mainly due to the payment made into the fund for financing
nuclear waste disposal, the reimbursement of the nuclear fuel tax,
the hybrid bond buyback programme, and the bonds issued and
redeemed by innogy SE. These and further measures resulted in a
decrease in financial assets and thus contributed to a significant rise
in net financial debt to €6.3 billion (previous year: €1.7 billion). By
contrast, provisions of relevance to net debt declined by €8.1 billion
to €14.0 billion (previous year: €22.1 billion) primarily as payments
were made to the fund for financing nuclear waste disposal. On aver-
age, provisions have a very long duration and are significantly influ-
enced by external factors such as the general level of interest rates.
A precise calculation of net debt and net financial debt is presented
on page 56 of the review of operations.

Upon first-time consolidation of an acquired company, the identi-

fiable assets, liabilities and contingent liabilities are recognised at

fair value. Determination of the fair value is based on valuation

Due to the strategic treatment of our subsidiary innogy SE as a
financial investment and the ensuing separation of finances, the
following commentary distinguishes between RWE and innogy.

methods which require a projection of anticipated future cash flows.

Consolidated financial statements > Notes

103

innogy SE’s successful IPO has caused RWE AG’s capital structure to
change fundamentally.

Non-junior bonds issued by innogy SE are currently rated ‘A-’ with a

stable outlook by Fitch and ‘BBB’ with a stable outlook by Standard &

Net debt remains a point of reference. It is calculated by adding
material non-current provisions to and deducting the net assets of
funded pension obligations from net financial debt. Excluding the
liabilities transferred to innogy SE, the liabilities of RWE AG of rele-
vance to net debt primarily consist of hybrid bonds and provisions
for pensions, nuclear waste management and mining. At the same
time, RWE’s share in the market capitalisation of innogy SE exceeds
these liabilities significantly. Against this backdrop, financial indica-
tors relating to net indebtedness are only of limited informational value.

RWE AG’s approach with regard to provisions is essentially based on
a balance sheet structure management system. Accordingly, finan-
cial assets are to cover 100 % and 75 % of the payments made from
the provisions in the next five and ten years, respectively.

Due to the strengthened capital structure, the balance sheet struc-
ture was optimised further. Hybrid capital outstanding was reduced
to about €1.9 billion within the scope of the hybrid bond buyback
programme. Further financial requirements are to be fulfilled by
operating liquidity management.

RWE’s credit rating is influenced by a number of qualitative and
quantitative factors. These include aspects such as the amount of
cash flows and debt as well as market conditions, competition, and
the political framework. Our hybrid bonds also support our rating.
The leading rating agencies, Moody’s and Fitch, classify part of
hybrid capital as equity.

RWE’s creditworthiness is currently rated ‘Baa3’ by Moody’s and
‘BBB’ by Fitch. Our rating thus remains in the investment-grade
range. The short-term credit ratings for RWE are ‘P-3’ and ‘F3’,
respectively.

Poor’s. Moody’s current rating is ‘Baa2’ with a negative outlook.

innogy SE thus has an investment grade rating. The creditworthiness

grades issued for short-term innogy bonds are ‘F-2’, ‘A-2’ and ‘P2’.

Changes in accounting regulations

The International Accounting Standards Board (IASB) has approved

amendments of existing International Financial Reporting Standards

(IFRSs), which became effective for the RWE Group as of fiscal 2017:

• Amendments to IAS 7 Cash Flow Statements Disclosure Initiative

(2016)

• Amendments to IAS 12 Recognition of Deferred Tax Assets for

Unrealised Losses (2016)

• Annual Improvements to IFRS 2014–2016 Cycle (2016). This

relates to the changes and clarifications to IFRS 12 included in

the collective standard.

First-time application of these changes has no material effect on the

consolidated financial statements.

New accounting standards

The IASB has adopted further standards and amendments to stand-

ards, which were not yet mandatory in the European Union (EU) in

fiscal 2017. The most important changes are presented below. EU

endorsement is still pending in some cases.

IFRS 9 Financial Instruments (2014) replaces the previous regula-
tions of IAS 39 on financial instruments. The standard contains

amended regulations on measurement categories for financial assets

and includes some smaller changes in relation to the measure ment

Among other things, innogy manages its capital structure on the

of financial liabilities. Fair value measurement without an effect on

basis of financial indicators. One key indicator is the debt factor,

income is stipulated for certain debt instruments reported under

which is calculated using net debt. Net debt is calculated by adding

assets. It also contains regulations on the impairment of assets and

material non-current provisions to net financial debt, and subtract-

hedge accounting. The rules on impair ment will now apply to ex-

ing the surplus of plan assets over benefit obligations. The debt fac-

pected losses. The new regulations on hedge accounting are intended

tor is the ratio of net debt to adjusted EBITDA. During the reporting

to enable better reporting of the risk management activities in the

period, it was 3.6 (previous year: 3.7).

consolidated financial statements. To this end, IFRS 9 expands the

range of underlying transactions qualifying for hedge accounting

and simplifies effectiveness testing, amongst other things. The new

Standard becomes effective for fiscal years starting on or after

1 January 2018.

As regards the classification and measurement of financial assets,

RWE does not anticipate any material effects on the recognition

of investments in debt instruments with a total carrying amount

of approximately €5.2 billion. In the future, a portion of our cash

104 RWE Annual Report 2017

investments in debt instruments will continue to be accounted for

RWE has concluded its IFRS 15 contract analysis. We no longer

using the equity method without an effect on profit or loss (about

anticipate there to be a significant impact on the following matters:

€1.4 billion). Debt instruments with a carrying amount of approxi-

mately €3.8 billion, which were measured at fair value without an

• Energy supply contracts with households containing free giveaways

effect on profit or loss according to IAS 39, will be measured at fair

or goods at a reduced price. According to IFRS 15, free gifts may

value with an effect on profit or loss in the future.

be recognised as separate performance obligations, to which a

The option to recognise changes in fair value in other comprehen-

which revenue must be recognised when control is transferred.

sive income is exercised for the lion’s share of investments in equity

For goods that are offered at a reduced price, the allocation of

instruments with a total carrying amount of approximately €1.6 bil-

the entire transaction price may also lead to a change in revenue,

lion. A small portion is measured at fair value with an effect on profit

unlike the current accounting treatment according to IAS 18.

portion of the transaction price must be allocated, as a result of

or loss.

No material changes are expected as regards the classification of

for customers. Warranties and guarantees may either represent an

financial assets that have been measured at amortised cost so far.

assurance that the product complies with contractually agreed

• Contracts with households including warranties and guarantees

In sum, the recognition of expected losses pursuant to the new im-

this. According to IFRS 15, products containing assurances going

pairment model will result in the earlier recognition of impairments,
higher volatility on the income statement, and lower equity at the

beyond this constitute separate performance obligations, to which
a portion of the transaction price must be allocated. Warranties

time of transition. The financial assets held by RWE are expected to

that only assure contractually agreed specifications are accounted

be additionally impaired in the range of €15 million to €35 million

for according to the principles of IAS 37.

specifications or may include assurances that go above and beyond

as of the transition date.

No material changes are anticipated concerning the recognition of

contract with a customer. If the company assumes that these

• Contract costs are additional costs incurred for the initiation of a

financial liabilities.

costs can be recovered, they are generally capitalised and written

down depending on the transfer of these goods or services to the

RWE’s previous hedge accounting can be continued. No additional

customer. If the expected depreciation period is not more than

hedge accounting relationships are designated due to IFRS 9. The

one year, the contract costs are simply offset with an effect on

exercise of the fair value option for own-use contracts is not envis-

expenses when said costs are incurred. The implementation of

aged. Under IFRS 9, instruments for hedging foreign currency risks

this new rule under IFRS 15 will be limited to changes in presenta-

continue to be fully designated. Foreign currency base risks are not

tion and disclosure in the Notes.

excluded. Resulting ineffectivities do not have a material impact on

RWE’s consolidated financial statements. The possibility of exclud-

• Payments made to customers for sales purposes are generally rec-

ing the fair value component for options in hedge accounting is not

ognised with a revenue-reducing effect. A payment on conclusion

exercised. In the transition to the classification and measurement

of a contract results in the recognition of an asset that must be

methods pursuant to IFRS 9, RWE will not restate any previous-year

reversed with a revenue-reducing effect over the term of the con-

figures and will thus adjust retained earnings as of 1 January 2018,

tract. If the payment that is to be made for sales-related purposes

in order to recognise the impacts from first-time application of the

falls due in the future, a provision is formed, which is reversed

standard.

upon payment.

IFRS 15 Revenue from Contracts with Customers (2014) inclu ding

• Contracts with households often grant the customer the right to

Amendments to IFRS 15, Effective Date of IFRS 15 (2015) and

early cancellation of the contract. If the customer can cancel the

Clarifications to IFRS 15 Revenue from Contracts with Customers
(2016) will replace IAS 18 Revenue and IAS 11 Construction Con-
tracts and the associated interpretations. The new standard does

contract with one-month’s notice, the contractual term amounts

to just one month under IFRS 15.

not distinguish between different types of orders and performance.

• Contracts with business customers often include agreed ranges

It establishes uniform criteria as to when revenue is realised for a

that allow the customer to deviate from the contractually agreed

performance obligation at a point in time or over time. Therefore,

purchase volume. Such contracts also include provisions on pen-

revenue is recognised when the customer obtains control of the

alty payments that must be made if the actual purchasing volume

agreed goods and services and can benefit from such. Application

falls outside of the agreed range. If these penalty payments are

of the new standard is required for annual periods beginning on

classified as significant and consumption is not determined based

or after 1 January 2018. RWE will make use of the modified retro-

on the monthly measurement of the purchase volume, this can

spective method for the first-time application as of 1 January 2018.

have effects on the recognition of received prepayments.

Consolidated financial statements > Notes

105

The following effects of applying IFRS 15 for the first time have

The following standards, amendments to standards, and interpre-

been identified:

tations are not expected to have any material effects on RWE’s

consolida ted financial statements:

• As regards regulatory fees, in particular in the field of renewa-

ble energy, individual situations were identified in which RWE

• Amendments to IAS 40 Transfers of Investment Property (2016)

qualifies as agent pursuant to IFRS 15 but not pursuant to IAS 18.

• Annual Improvements to IFRS Standards 2014-2016 Cycle (2016).

This results in a decrease in the revenue and cost of materials in

This relates to the amendments and clarifications to IFRS 1 and

the Grid division within the innogy segment by about €2.5 billion,

IAS 28 contained in the collective standard.

as performance bonuses of the transmission system operator no

• Amendments to IFRS 2 Classification and Measurement of Share-

longer qualify as revenue pursuant to the direct marketing model

based Payment Transactions (2016)

of the German Renewable Energy Act. This does not have an

• Amendments to IFRS 9: Prepayment Features with Negative

impact on income.

Compensation (2017)

• Amendments to IAS 28 Long-term Interests in Associates and

• The first-time application of IFRS 15 will also change the state-

Joint Ventures (2017)

ment of unrealised changes in the fair values of commodity

• Annual Improvements to IFRS Standards 2015-2017 Cycle (2017).

derivatives. From 1 January 2018 onwards, they will no longer be

The collective standard contains amendments and clarifications to

recognised under revenue or the cost of materials as they will be

IFRS 3 and IFRS 11 as well as to IAS 12 and IAS 23.

stated as part of other operating income instead. The reclassifi-
cation will stabilise revenue. This will not have an effect on income.

• Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets
between an Investor and an Associate or Joint Venture (2014).

First-time application of these amendments in the EU was delayed

• Compared to the current guidance, the presentation and disclo-

indefinitely.

sure requirements under IFRS 15 are more detailed. RWE has re-

•

IFRS 17 Insurance Contracts (2017)

viewed the new disclosure notes and modified its systems and

• Application of IFRS 9 Financial Instruments in conjunction with

processes in order to comply with the new requirements.

IFRS 4 Insurance Contracts (2016)

IFRS 16 Leases (2016) will replace IAS 17 Leases and the related
interpretations IFRIC 4, SIC-15 and SIC-27. According to the new

• Amendments to IAS 19 Plan Amendment, Curtailment or

Settlement (2018)

•

IFRIC 22 Foreign Currency Transactions and Advance Considera-

standard on leases, aside from short-term leases (less than 12 months)

tion (2016)

and leases of low-value assets, all leases are to be reported on the

•

IFRIC 23 Uncertainty over Income Tax Treatments (2017)

balance sheet. Consequently, regardless of economic ownership of

the leased asset, the lessee must recognise a right-of-use asset and

a corresponding lease liability in the amount of the present value

of the lease payments. For lessors, the new Standard does not result

in any significant changes to the current accounting treatment pur-

suant to IAS 17 and still requires the classification of leases.

The new standard becomes effective for fiscal years starting on or

after 1 January 2019. RWE will not apply IFRS 16 early in 2018 in

conjunction with IFRS 15 and will apply the modified retrospective

method in transitioning to IFRS 16. The effects of IFRS 16 on the

consolidated financial statements are being currently reviewed. Based

on initial preliminary assessments, the application of IFRS 16 will

cause RWE’s depreciation and amortisation to increase annually by

a low triple-digit million euro amount from fiscal 2019 onwards,

whereas the curtailment of the financial result is expected to be in

low, double-digit million euro range. By contrast, other operating

expenses receive relief in the amount of the two aforementioned

effects. In consequence, RWE does not anticipate that this will

have an impact on net income. Furthermore, based on the current

preliminary assessment, RWE’s net financial debt is expected to

increase by a low single-digit billion euro amount as a consequence

of the implementation of IFRS 16.

106 RWE Annual Report 2017

Notes to the Income Statement

(1) Revenue
As a rule, revenue is recorded when the goods have been delivered

A breakdown of revenue by division and geographical region is

or the services have been rendered, and the risks related to the goods

contained in the segment reporting on page 145 et seqq.

or services have been transferred to the customer.

To improve the presentation of business development, we report

customer in the year under review or the previous year.

revenue generated by energy trading operations as net figures,

reflecting realised gross margins. Energy trading revenue is generated

The item ‘Natural gas tax/electricity tax’ comprises the taxes paid

in the Supply & Trading segment. By contrast, we report electricity,

directly by Group companies.

RWE did not generate more than 10 % of revenues with any single

gas, coal and oil transactions that are subject to physical settlement

on a gross basis. In fiscal 2017, gross revenue (including energy

trading) totalled €86,725 million (previous year: €87,208 million).

(2) Other operating income

Other operating income
€ million

Income from own work capitalised

Income from changes in finished goods and work in progress

Release of provisions

Cost allocations /refunds

Disposal and write-back of current assets (excluding marketable securities)

Disposal and write-back of non-current assets including income from deconsolidation

Income from derivative financial instruments

Compensation and insurance benefits

Rent and lease

Remeasurement gain in step acquisitions

Miscellaneous

2017

2016

312

112

137

649

2,154

3,608

252

208

273

128

363

1,435

The refund of the €1,797 million in nuclear fuel taxes paid in earlier

(3) Cost of materials

periods contained in the ‘Miscellaneous’ item is based on a decision

by the German Constitutional Court dated 7 June 2017. The nuclear

fuel tax levied until 31 December 2016 could not be reconciled

with constitutional rules, becoming null and void retroactively. The

Cost of materials
€ million

Cost of raw materials and of goods for resale

refund includes the €100 million share economically attributable

Cost of purchased services

to E.ON.

2017

2016

19,132

12,194

31,326

20,977

12,420

33,397

Income from the disposal of non-current financial assets and loans

is disclosed under income from investments if it relates to invest-

The cost of raw materials also includes expenses for the use and

ments; otherwise it is recorded as part of the financial result as is

the income from the disposal of current marketable securities.

dispo sal of spent nuclear fuel assemblies. This item also includes
expen ses for CO2 emission allowances.

A total of €42,140 million in energy trading revenue (previous year:

€41,375 million) was netted out against cost of materials.

Consolidated financial statements > Notes

107

(4) Staff costs

Staff costs
€ million

Wages and salaries

Cost of social security, pensions and
other benefits

The division of the former Conventional Power Generation segment

into the two new Lignite & Nuclear and European Power segments

2017

2016

had resulted in the division of the former cash-generating unit for

3,738

3,840

ment. The impairment test occasioned by this resulted in a write-up

the German power plant portfolio due to the resulting new manage-

966

4,704

937

4,777

of €401 million for the Lignite & Nuclear cash-generating unit, which

is recognised in other operating income (recoverable amount:

€1.4 billion). In contrast, an impairment of €321 million was recog-

nised for the new cash- generating unit for the German power

plant portfolio in the European Power segment and provisions for

Number of employees

2017

2016

impending losses were formed (recoverable amount: €0.0 billion).

Employees covered by collective agreements
and other employees

Employees not covered by collective agreements

46,757

12,576

59,333

46,543

12,530

59,073

These effects stem from the non- recurrence of the compensatory

effects of the division of the cash- generating unit. The assets are

divided between the new cash- generating units analogously to the

division of the former Conven tional Power Generation segment

into the two new Lignite & Nuclear and European Power segments,

as presented in segment reporting on page 146. The recoverable

The number of employees is arrived at by conversion to full-time
positions, meaning that part-time and fixed-term employment relation-

amounts were determined on the basis of the fair values less costs
to sell. In this context, the valuation models and parameters valid

ships are included in accordance with the ratio of the part-time work

as of 31 December 2016 were applied.

or the duration of the employment to the annual employment time.

On average, 1,998 trainees were employed (previous year: 2,070).

In the year under review, an impairment loss of €301 million was

Trainees are not included in the personnel headcount.

recognised for property, plant and equipment of the Hungarian

company Mátrai Erőmű Zrt. (Mátra) that is stated as being held for

sale in the Lignite & Nuclear segment due to the intended sale

(5) Depreciation, amortisation and impairment losses

(recoverable amount: €0 billion). The recoverable amount corresponds

Depreciation, amortisation and
impairment losses
€ million

Intangible assets

Property, plant and equipment

Investment property

2017

2016

purchase price offers available on the date of the classification as

to the fair value less costs to sell that was derived from the binding

‘held for sale’. It is assigned to Level 2 of the fair value hierarchy.

717

2,212

2,939

254

6,388

In the previous year, €3,695 million of the impairment losses recog-

nised in the former Conventional Power Generation segment were

allocable to the German power plant portfolio, €168 million to a

6,647

Turkish power station unit, €106 million to the Scottish biomass-

fired power plant Markinch and €58 million to N.V. Elektriciteits-

Produktiemaatschappij Zuid-Nederland EPZ, Borssele/Netherlands,

In respect of amortisation on intangible assets, €27 million (previous

which is presented as a joint operation.

year: €26 million) pertained to customer bases of acquired enterprises.

Impairments
€ million

Intangible assets

Property, plant and equipment

Investment property

2017

2016

latory framework conditions underlying the annual impairment

The deteriorated commercial assumptions and more difficult regu-

488

375

869

4,354

4,380

test resulted in an impairment to the goodwill of the ‘Retail UK’

cash- generating unit within the innogy segment. Therefore, an

impairment loss of €479 million was recognised (recoverable amount:

€1.5 billion). The envisaged merger of the retail activities of innogy

and SSE in Great Britain did not result in a reassessment of the im-

pairment.

108 RWE Annual Report 2017

In the year under review, an impairment loss of €16 million was recog-

rights recognised in intangible assets), essentially due to deteriorated

nised for gas storage facilities in the innogy segment (€12 million

regulatory framework conditions in Poland (recoverable amount:

of which for property, plant and equipment and €4 million of which

€0.2 billion).

for intangible assets) (recoverable amount: €0.0 billion), essentially

due to changed price expectations. In the previous year, impairment

Other impairments on intangible assets and property, plant and

losses of €204 million were recognised for gas storage facilities, of

equipment were recognised primarily on the basis of cost increases

which €186 million were allocable to property, plant and equipment

and changes in price expectations.

and €18 million were allocable to intangible assets (recoverable

amount: €0.1 billion).

Recoverable amounts are determined on the basis of fair values less

costs to sell using valuation models based on planned cash flows.

Furthermore, an impairment loss of €20 million was recognised for

The valuation models used discount rates ranging from 4.25 % to

property, plant and equipment for the construction of offshore wind

5.50 % (previous year: 4.00 % to 9.75 %). Our key planning assump-

farms in the innogy segment due to permanent decreases in value

(recoverable amount: €0.1 billion). In the prior year, €97 million

of the impairment loss was attributable to onshore wind farms in

tions relate to the development of wholesale prices of electricity,
crude oil, natural gas, coal and CO2 emission allowances, retail prices
of electricity and gas, market shares and regulatory framework con-

Poland (of which €90 million were attributable to property, plant

ditions. Based on the use of internal planning assumptions, the deter-

and equipment and €7 million were attributable to the operating

mined fair values are assigned to Level 3 of the fair value hierarchy.

(6) Other operating expenses

Other operating expenses
€ million

Maintenance and renewal obligations

Additions to provisions

Concessions, licenses and other contractual obligations

Structural and adaptation measures

Legal and other consulting and data processing services

Disposal of current assets and decreases in values
(excluding decreases in the value of inventories and marketable securities)

Disposal of non-current assets including expenses from deconsolidation

Insurance, commissions, freight and similar distribution costs

General administration

Advertising

Expenses from derivative financial instruments

Lease payments for plant and grids as well as rents

Postage and monetary transactions

Fees and membership dues

Exchange rate losses

Other taxes (primarily on property)

Miscellaneous

2017

790

362

438

279

179

109

149

141

268

129

117

221

319

2016

320

1,787

443

− 108

267

239

178

128

268

130

136

297

3,686

4,323

The ‘Miscellaneous’ item contains the €100 million share of the refund

In the previous year, expenses for structural and adaptation measures

of the nuclear fuel tax paid in earlier periods economically allocable

included income of €79 million from the release of provisions for

to E.ON.

restructuring measures.

Consolidated financial statements > Notes

109

(7) Income from investments
Income from investments includes all income and expenses which

income from investments accounted for using the equity method

have arisen in relation to operating investments. It is comprised of

and other income from investments.

Income from investments
€ million

Income from investments accounted for using the equity method

Income from non-consolidated subsidiaries

of which: amortisation / impairment losses on non-consolidated subsidiaries

Income from other investments

of which: impairment of shares in other investments

Income from the disposal of investments

Income from loans to investments

Other income from investments

Expenses of €19 million (previous year: €8 million) included in the

item ‘Income from loans to investments’ relate exclusively to impair-

ment losses.

(8) Financial result

Financial result
€ million

Interest and similar income

Other financial income

Financial income

Interest and similar expenses

Interest accretion to

Provisions for pensions and similar obligations (including capitalised surplus of plan assets)

Provisions for nuclear waste management as well as to mining provisions

Other provisions

Other finance costs

Finance costs

2017

2016

302

− 29

− 37

− 18

104

118

420

2017

220

2,095

2,315

907

120

146

− 5

1,898

3,066

− 751

387

− 9

− 17

− 18

120

153

540

2016

271

1,612

1,883

914

134

876

277

1,910

4,111

− 2,228

The financial result breaks down into net interest, interest accretion

In the year under review, €2 million in borrowing costs were capital-

to provisions, other financial income and other finance costs.

ised as costs in connection with the acquisition, construction or

production of qualifying assets (previous year: €7 million). The under-

Interest accretion to provisions contains the annual amounts of

lying capitalisation rate ranged from 3.8 % to 4.4 % (previous year:

accrued interest. It is reduced by the imputed interest income on

from 4.4 % to 5.0 %).

plan assets for the coverage of pension obligations.

Net interest essentially includes interest income from interest-bearing

securities and loans, income and expenses relating to marketab le

securities, and interest expenses.

110 RWE Annual Report 2017

Net interest
€ million

Interest and similar income

Interest and similar expenses

2017

2016

220

907

− 687

271

914

− 643

Due to the utilisation of tax loss carryforwards unrecognised in prior

years, current taxes on income were reduced by €272 million (pre-

vious year: €4 million). Expenses from deferred taxes declined by

€33 million (previous year: €121 million), due to reassessments of

and previously unrecognised tax carryforwards.

Net interest stems from financial assets and liabilities, which are

allocated to the following categories:

Interest result by category
€ million

Loans and receivables

Financial assets available for sale

Financial liabilities carried at (amortised) cost

2017

2016

149

− 907

− 687

173

− 914

− 643

Income taxes recognised in other
comprehensive income
€ million

Fair valuation of financial instruments
available for sale

Fair valuation of financial instruments
used for hedging purposes

Actuarial gains and losses of defined benefit
pension plans and similar obligations1

1 Including valuation allowances.

2017

2016

− 3

− 171

− 166

− 579

430

− 144

Other financial income includes €130 million in gains realised from

the disposal of marketable securities (previous year: €199 million).

Taxes in the amount of €16 million (previous year: €6 million) were

It also includes €257 million in interest income on portions of the

offset directly against equity.

nuclear fuel tax paid by RWE and refunded in 2017. €243 million

thereof is allocable to RWE shareholders. Of the other finance costs,

€109 million (previous year: €318 million) stem from realised losses

on the disposal of marketable securities.

(9) Taxes on income

Taxes on income
€ million

Current taxes on income

Deferred taxes

2017

2016

702

741

819

− 1,142

− 323

Of the deferred taxes, €27 million is related to temporary differences

(previous year: – €1,521 million). In the year under review, changes

in valuation allowances for deferred tax assets amounted to

– €342 million (previous year: €1,460 million).

Current taxes on income contain €128 million in net tax income

(previous year: expenses of €92 million) relating to prior periods.

Consolidated financial statements > Notes

111

Tax reconciliation
€ million

Income before tax

Theoretical tax expense

Differences to foreign tax rates

Tax effects on

Tax-free domestic dividends

Tax-free foreign dividends

Other tax-free income

Expenses not deductible for tax purposes

Accounting for associates using the equity method
(including impairment losses on associates’ goodwill)

Unutilisable loss carryforwards, utilisation of unrecognised loss carryforwards,
write-downs on loss carryforwards, recognition of loss carryforwards

Income on the disposal of investments

Changes in foreign tax rates

Other allowances for deferred taxes in the RWE AG tax group

Other changes in deferred taxes from Group restructuring

Other

Effective tax expense

Effective tax rate in %

The theoretical tax expense is calculated using the tax rate for the

RWE Group of 32.5 % (previous year: 31.9 %). This is derived from the

prevailing 15 % corporate tax rate, the solidarity surcharge of 5.5 %,

and the Group’s average local trade tax rate.

2017

3,056

993

–39

− 57

− 3

− 20

130

− 6

− 214

–20

− 44

741

24.2

2016

− 5,807

− 1,852

− 62

− 55

− 5

− 3

− 46

1,247

− 6

752

− 560

161

− 323

5.6

112 RWE Annual Report 2017

Notes to the Balance Sheet

(10) Intangible assets

Intangible assets

€ million

Cost

Development
costs

Concessions,
patent rights,
licences and
similar rights

Customer
relationships
and similar
assets

Goodwill

Prepayments

Total

Balance at 1 Jan 2017

1,047

2,816

2,915

11,664

18,448

Additions /disposals due to changes in the
scope of consolidation

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2017

Accumulated amortisation /impairment losses

Balance at 1 Jan 2017

Additions /disposals due to changes in the
scope of consolidation

Amortisation /impairment losses in the
reporting period

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2017

Carrying amounts

Balance at 31 Dec 2017

Cost

Balance at 1 Jan 2016

Additions /disposals due to changes in the
scope of consolidation

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2016

Accumulated amortisation /impairment losses

Balance at 1 Jan 2016

Additions /disposals due to changes in the
scope of consolidation

Amortisation /impairment losses in the
reporting period

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2016

Carrying amounts

Balance at 31 Dec 2016

– 29

– 30

228

837

630

104

– 5

– 18

225

489

348

143

– 3

3,054

– 83

2,810

– 10

– 4

167

203

– 126

298

11,671

18,403

2,410

2,658

– 2

107

2,493

– 84

2,564

479

– 6

474

5,699

717

– 104

293

6,020

561

246

11,197

12,383

1,137

2,790

3,319

11,979

– 42

2,816

112

– 6

– 401

2,915

– 393

11,664

2,312

3,040

120

– 17

2,410

– 400

2,658

– 34

107

– 144

1,047

664

– 33

108

– 1

– 82

630

417

– 1

– 5

– 1

19,232

119

179

– 980

113

18,448

6,017

– 4

254

– 499

5,699

406

257

11,663

12,749

Consolidated financial statements > Notes

113

In the reporting period, the RWE Group’s total expenditures on

Mid-term business plans are based on country-specific assumptions

research and development amounted to €182 million (previous year:

regarding the development of key economic indicators such as gross

€165 million).

domestic product, consumer prices, interest rate levels and nominal

wages. These estimates are, amongst others, derived from macro-

Goodwill breaks down as follows:

economic and financial studies.

Goodwill
€ million

Grid & Infrastructure Germany

Grid & Infrastructure Eastern Europe

Retail Netherlands /Belgium

Retail Germany

Retail United Kingdom

Retail Eastern Europe

Renewables

Supply & Trading

31 Dec 2017

31 Dec 2016

Our key planning assumptions for the business segments active in

2,736

1,159

2,704

923

1,525

429

715

1,006

11,197

2,768

1,107

2,670

928

2,070

409

705

1,006

11,663

Europe’s electricity and gas markets relate to the development of
wholesale prices of electricity, crude oil, natural gas, coal and CO2
emission allowances, retail prices of electricity and gas, market

shares and regulatory framework conditions.

The discount rates used for business valuations are determined on

the basis of market data. With regard to cash-generating units,

during the period under review they ranged from 3.25 % to 5.50 %

after tax (previous year: 4.00 % to 5.75 %).

For the extrapolation of future cash flows going beyond the detailed
planning horizon, we used a growth rate of 0.0 % (previous year:

0.0 % to 1 %). As a rule, the growth rate for each division is derived

In the third quarter of every fiscal year, an impairment test is per-

from experience and expectations of the future and does not exceed

formed to determine if there is any need to write down goodwill. In

the long-term average growth rates of the respective markets in which

the course of this, goodwill is allocated to the cash-generating units.

the Group companies are active. The annual cash flows assumed

for the years after the detailed planning horizon include capital

In the year under review, goodwill increased by €53 million (pre-

expenditure in the amount necessary to maintain the scope of busi-

vious year: €0 million) as a result of first-time consolidations. In the

ness. The growth rates assumed for the cash flows are determined

cash-generating units Retail Germany and Grid & Infrastructure

taking account of additionally necessary expansion investments.

Germany, changes in current redemption liabilities from put options

resulted in a €36 million decrease in goodwill without an effect on

The deterioration in commercial assumptions and more difficult

income (previous year: increase of €92 million).

regulatory framework conditions underlying the impairment test

conducted in the third quarter resulted in an impairment to the

The recoverable amount of the cash-generating unit is determined,

goodwill of the Retail UK cash-generating unit within the innogy seg-

which is defined as the higher of fair value less costs to sell or value

ment. An impairment loss of €479 million was recognised (recover-

in use. Fair value is the best estimate of the price that an independ-

able amount: €1.5 billion). The envisaged merger of the retail activi-

ent third party would pay to purchase the cash-generating unit as of

ties of innogy and SSE in Great Britain did not result in a different

the balance-sheet date. Value in use reflects the present value of

assessment of the impairment. The fair value less costs to sell was

the future cash flows which are expected to be generated with the

determined using an enterprise valuation model based on cash flow

cash-generating unit.

budgets and a discount rate of 5.50 % after taxes (previous year:

4.75 %).

Fair value less costs to sell is assessed from an external perspective

and value in use from a company-internal perspective. Values are

determined using a business valuation model, based on planned

future cash flows. These cash flows, in turn, are based on the busi-

ness plan, as approved by the Executive Board and valid at the time

of the impairment test. They pertain to a detailed planning period

of three years. In certain justifiable cases, a longer detailed planning

period is taken as a basis, insofar as it is necessary due to economic

or regulatory conditions. The cash flow plans are based on experi-

ence as well as on expected market trends in the future. If available,

market transactions in the same sector or third-party valuations are

taken as a basis for determining fair value. Based on the use of inter-

nal planning assumptions, the determined fair values are assigned

to Level 3 of the fair value hierarchy.

114 RWE Annual Report 2017

With the exception of the Retail UK cash-generating unit in the

The Retail Netherlands/Belgium cash-generating unit exhibited the

innogy segment, as of the balance-sheet date, the recoverable

smallest surplus of recoverable amount over the carrying amounts.

amounts of the cash-generating units – determined as the fair value

The recoverable amount was €1.4 billion higher than the carrying

less costs to sell – were higher than their carrying amounts. The

amount. Impairment would have been necessary if the calculations

surpluses react especially sensitively to changes in the discount rate,

had used an after-tax discount rate increased by more than 2.1 per-

the growth rate and cash flows in terminal value.

centage points to above 5.8 %, a growth rate decreased by more

than 2.3 percentage points to below – 2.3 %, or cash flows reduced

by more than €57 million in terminal value.

Consolidated financial statements > Notes

(11) Property, plant and equipment

Property, plant and equipment

€ million

Cost

Balance at 1 Jan 2017

Additions /disposals due to changes in the scope
of consolidation

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2017

Accumulated depreciation /impairment losses

Additions /disposals due to changes in the scope
of consolidation

Amortisation /impairment losses in the reporting period

Transfers

Currency translation adjustments

Disposals

Additions

Balance at 31 Dec 2017

Carrying amounts

Balance at 31 Dec 2017

Cost

Balance at 1 Jan 2016

Additions /disposals due to changes in the scope of
consolidation

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2016

Accumulated depreciation /impairment losses

115

Total

Land, land
rights and
buildings
incl. buildings
on third-party
land

Technical
plant and
machinery

Other
equipment,
factory
and office
equipment

Prepayments
and plants
under
construction

7,339

74,257

2,152

1,708

85,456

– 149

197

7,156

– 950

1,477

237

– 121

620

74,280

– 6

138

170

2,123

– 149

215

– 2

– 890

1,829

– 53

421

404

– 11

142

151

4,429

54,187

1,505

162

825

– 273

– 10

2,317

915

– 8

851

– 943

2,532

– 5

– 82

1,082

85,876

61,001

– 1,058

2,213

– 2

– 29

743

410

60,972

2,727

20,093

618

1,466

24,904

7,489

73,967

2,246

1,710

85,412

– 214

122

107

– 68

7,339

1,854

171

– 1,186

606

74,257

132

– 21

– 25

195

2,152

– 30

324

– 261

– 25

1,708

– 172

2,432

– 4

– 1,304

908

85,456

Balance at 1 Jan 2017

4,439

54,126

1,521

Balance at 1 Jan 2016

4,206

49,358

1,569

922

56,055

Additions /disposals due to changes in the scope of
consolidation

Amortisation /impairment losses in the reporting period

Transfers

Currency translation adjustments

Disposals

Additions

Balance at 31 Dec 2016

Carrying amounts

Balance at 31 Dec 2016

– 216

479

– 30

5,719

– 8

– 472

512

176

– 16

– 20

191

4,439

54,126

1,521

2,900

20,131

631

– 19

– 3

– 1

915

793

– 170

6,388

– 1

– 525

738

61,001

24,455

116 RWE Annual Report 2017

Property, plant and equipment in the amount of €82 million (pre-

€250 million) was attributable to assets leased under finance leases.

vious year: €87 million) were subject to restrictions from land charges,

These assets essentially consist of technical plant and equipment.

chattel mortgages or other restrictions. Of the total carrying amount

Disposals of property, plant and equipment resulted from sale or

of property, plant and equipment, €248 million (previous year:

decommissioning.

(12) Investment Property

Investment Property
€ million

Cost

Balance at 1 Jan 2017

Additions

Transfers

Disposals

Investment Property
€ million

Cost

205

Balance at 1 Jan 2016

Additions

Transfers

Disposals

Balance at 31 Dec 2017

169

Balance at 31 Dec 2016

Accumulated depreciation /impairment losses

Balance at 1 Jan 2017

142

Balance at 1 Jan 2016

Depreciation /impairment losses in the reporting period

Transfers

Disposals

Write-backs

Balance at 31 Dec 2017

Carrying amounts

Balance at 31 Dec 2017

Depreciation /impairment losses in the reporting period

Transfers

Disposals

Write-backs

126

Balance at 31 Dec 2016

Carrying amounts

Balance at 31 Dec 2016

218

205

146

142

As of 31 December 2017, the fair value of investment property

appraisers. Of the carrying amount of investment property, €0 million

amounted to €115 million (previous year: €127 million), of which

(previous year: €4 million) is attributable to assets leased under

€19 million is assigned to Level 2 (previous year: €23 million) and

finance leases. Rental income in the reporting period amounted to

€96 million is assigned to Level 3 (previous year: €104 million) of

€13 million (previous year: €12 million). Direct operating expenses

the fair value hierarchy. Of the fair value, €41 million (previous year:

totalled €9 million (previous year: €8 million).

€48 million) is based on valuations by external, independent

Consolidated financial statements > Notes

117

(13) Investments accounted for using the equity method
Information on material and non-material investments in associates

and joint ventures accounted for using the equity method is presented

in the following summaries:

Material investments accounted for using the equity method

€ million

Balance sheet1

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Share of equity2

Goodwill

Carrying amounts

Statement of comprehensive income1

Revenue

Income

Other comprehensive income

Total comprehensive income

Dividends (prorated)

RWE shareholding

1 Figures based on shareholding of 100 % in KEH.
2 Figures based on proportional share of equity in KEH and KELAG.

Amprion GmbH,
Dortmund

KELAG-Kärntner Elektrizitäts-AG /
Kärntner Energieholding
Beteiligungs GmbH, (KEH)
Klagenfurt /Austria

31 Dec 2017

31 Dec 2016

31 Dec 2017

31 Dec 2016

3,607

2,609

1,092

3,238

474

3,062

2,092

648

2,627

472

474

472

1,626

1,607

370

874

277

354

198

552

318

837

261

341

198

540

12,418

12,210

1,320

1,383

142

– 25

117

25 %

142

– 8

134

25 %

– 4

– 6

49 %

Amprion GmbH, headquartered in Dortmund, Germany, is a trans-
mission system operator (TSO) for the electricity sector, pursuant to

KELAG-Kärntner Elektrizitäts-AG, headquartered in Klagenfurt,
Austria, is a leading Austrian energy supplier in the fields of elec-

the German Energy Act (EnwG). Amprion’s main shareholder is a

tricity, district heating and natural gas. Via innogy SE, RWE has a

consortium of financial investors led by Commerz Real, a subsidiary

share of 49 % in Kärntner Energieholding Beteiligungs GmbH (KEH),

of Commerzbank.

which is KELAG’s largest shareholder.

118 RWE Annual Report 2017

Non-material investments accounted for using the equity method

Associates

Joint ventures

€ million

Income (pro-rata)

Other comprehensive income

Total comprehensive income

Carrying amounts

31 Dec 2017

31 Dec 2016

31 Dec 2017

31 Dec 2016

172

– 78

203

213

1,317

1,403

– 22

503

115

129

494

The RWE Group holds shares with a book value of €97 million (pre-

subject to temporary restrictions or conditions in relation to their

vious year: €98 million) in associates and joint ventures, which are

distributions of profits, due to provisions of loan agreements.

(14) Other non-current financial assets

Other non-current financial assets
€ million

Non-consolidated subsidiaries

Other investments

Non-current securities

31 Dec 2017

31 Dec 2016

254

617

238

280

535

240

1,109

1,055

Non-current securities primarily consist of fixed-interest marketable

of the Pre-Retirement Part-Time Work Act (AltTZG) and from the

securities and shares of listed companies. Long-term securities

management of long-term working hours accounts pursuant to Sec.

amounting to €87 million and €12 million (previous year: €102 mil-

7e of the German Code of Social Law (SGB IV), respectively. This

lion and €15 million) were deposited in a trust account for RWE AG

coverage applies to the employees of RWE AG as well as to the

and its subsidiaries, in order to cover credit balances stemming from

employees of Group companies.

the block model for pre-retirement part-time work, pursuant to Sec. 8a

(15) Financial receivables

Financial receivables

€ million

Loans to non-consolidated subsidiaries and investments

Collateral for trading activities

Other financial receivables

Accrued interest

Miscellaneous other financial receivables

31 Dec 2017

31 Dec 2016

Non-current

Current

Non-current

Current

237

122

359

1,051

117

572

1,745

249

154

403

719

661

1,471

Companies of the RWE Group deposited collateral for the trading

For the miscellaneous other financial receivables, there is limited

activities stated above for exchange-based and over-the-counter

control in the amount of €260 million (previous year: €87 million)

transactions. These are to guarantee that the obligations from the

related to the financing of the pension commitments of three com-

transactions are discharged even if the development of prices is not

panies in the innogy segment.

favourable for RWE. Regular replacement of the deposited collateral

depends on the contractually agreed thresholds, above which collat-

eral must be provided for the market value of the trading activities.

Consolidated financial statements > Notes

119

(16) Other receivables and other assets

Other receivables and other assets

€ million

Derivatives

Capitalised surplus of plan assets over benefit obligations

Prepayments for items other than inventories

CO2 emission allowances
Miscellaneous other assets

of which: financial assets

of which: non-financial assets

31 Dec 2017

31 Dec 2016

Non-current

Current

Non-current

1,014

103

1,187

1,127

3,249

217

121

1,305

4,892

3,483

1,409

1,080

1,175

1,120

Current

5,414

305

208

1,491

7,418

5,699

1,719

The financial instruments reported under miscellaneous other assets

basis differences’) in the amount of €441 million (previous year:

are measured at amortised cost. Derivative financial instruments are

€463 million), as it is neither probable that there will be any distri-

stated at fair value. The carrying values of exchange-traded derivatives
with netting agreements are offset.

butions in the foreseeable future, nor will the temporary differences
reduce in the foreseeable future. €4,135 million and €3,572 million

(17) Deferred taxes
Deferred tax assets and liabilities principally stem from the fact that

measurements in the IFRS statements differ from those in the tax

of the gross deferred tax assets and liabilities, respectively, will be

realised within twelve months (previous year: €3,018 million and

€2,764 million).

bases. As of 31 December 2017, no deferred tax liabilities were recog-

The following is a breakdown of deferred tax assets and liabilities

nised for the difference between net assets and the carrying value

by item:

of the subsidiaries and associates for tax purposes (known as ‘outside

Deferred taxes

€ million

Non-current assets

Current assets

Exceptional tax items

Non-current liabilities

Provisions for pensions

Other non-current liabilities

Current liabilities

Tax loss carryforwards

Corporate income tax (or comparable foreign income tax)

Trade tax

Gross total

Netting

Net total

31 Dec 2017

31 Dec 2016

Assets

1,525

1,401

932

1,252

2,734

7,844

328

8,184

– 5,557

2,627

Liabilities

1,619

2,312

748

325

1,260

6,275

– 5,557

718

Assets

1,302

1,262

1,786

1,030

1,756

7,137

334

7,483

– 4,599

2,884

Liabilities

1,340

2,075

874

161

183

689

5,322

– 4,599

723

120 RWE Annual Report 2017

As of 31 December 2017, RWE reported deferred tax claims which

results from the exercise of discretionary tax treatment options.

exceeded the deferred tax liabilities by €417 million (previous year:

Instead of the loss carryforwards that, as planned, are not usable,

€370 million), in relation to companies which suffered a loss in the

this causes future current tax write-downs to increase without the

current or previous period. The basis for the formation of deferred

current estimation of the planned unusability of these additional

tax assets is the judgement of the management that it is likely that

amounts changing in the foreseeable future.

the companies in question will generate taxable earnings, against

which unutilised tax losses and deductible temporary differences

€2,440 million in corporate income tax loss carryforwards for which

can be applied.

no deferred tax claims have been recognised will primarily apply to

the following nine years. The other loss carryforwards are also sub-

The capitalised tax reduction claims from loss carryforwards result

ject to time-limited deduction limitations (mostly up to nine years),

from the expected utilisation of previously unused tax loss carryfor-

but they are expected to be used within the legal time limits.

wards in subsequent years.

It is sufficiently certain that these tax carryforwards will be realised.

deferred tax assets were recognised amounted to €12,185 million

As of 31 December 2017, temporary differences for which no

At the end of the reporting period, corporate income tax loss

(previous year: €9,748 million).

carryforwards and trade tax loss carryforwards for which no deferred

tax claims have been recognised amounted to €2,513 million

In the year under review, a deferred tax expense of €14 million

and €344 million, respectively (previous year: €7,935 million and
€3,139 million). The decline in these loss carryforwards mainly

arising from the currency translation of foreign financial statements
was offset against equity (previous year: €38 million).

(18) Inventories

Inventories
€ million

Raw materials, incl. nuclear fuel assemblies and earth excavated for lignite mining

Work in progress – goods /services

Finished goods and goods for resale

Prepayments

31 Dec 2017

31 Dec 2016

998

200

719

1,144

196

627

1,924

1,968

The carrying amount of inventories acquired for resale purposes was

value and were deposited with clearing banks as collateral in the

€58 million (previous year: €69 million). Of this, €44 million related

amount of €185 million in the previous year.

to gas inventories (previous year: €45 million), €10 million related to

coal inventories (previous year: €18 million) and €4 million related

(20) Cash and cash equivalents

to biomass inventories (previous year: €6 million).

The fair value of gas and coal inventories is determined every month

on the basis of the current price curves of the relevant indices for

gas (e.g. NCG) and coal (e.g. API#2). Biomass inventories are also

measured at the end of each month, using the corresponding index

prices depending on the location (e.g. ARA harbours). The valua-

tions are based on prices which can be observed directly or indirect-

ly (Level 2 of the fair value hierarchy). Differences between the fair

value and the carrying value of inventories acquired for resale purpos-

Cash and cash equivalents
€ million

Cash and demand deposits

31 Dec 2017

31 Dec 2016

3,924

4,535

Marketable securities and other cash
investments (maturity less than three
months from the date of acquisition)

3,933

4,576

es are recognised on the income statement at the end of the month.

RWE keeps demand deposits exclusively for short-term cash positions.

(19) Marketable securities
Of the current marketable securities, €4,065 million were fixed- interest

creditworthiness criteria. Such criteria include their rating from one

of the three renowned rating agencies – Moody’s, Standard & Poor’s

marketable securities (previous year: €9,171 million) with a mat-

and Fitch – their equity capital and the prices for credit default swaps.

urity of more than three months from the date of acquisition, and

As in the previous year, interest rates on cash and cash equivalents

For cash investments, banks are selected on the basis of various

€828 million were stocks and profit-participation certificates (pre-

were at market levels in 2017.

vious year: €654 million). Marketable securities are stated at fair

Consolidated financial statements > Notes

121

(21) Equity
A breakdown of fully paid-up equity is shown on page 92.

The subscribed capital of RWE AG is structured as follows:

Subscribed capital

Common shares

Preferred shares

31 Dec 2017
Number
of shares

31 Dec 2016
Number
of shares

in ’000

575,745

39,000

614,745

in %

93.7

6.3

in ’000

575,745

39,000

in %

93.7

6.3

100.0

614,745

100.0

31 Dec 2017
Carrying
amount
€ million

31 Dec 2016
Carrying
amount
€ million

1,474

100

1,574

1,474

100

1,574

Common and preferred shares are no-par-value bearer share certifi-

In fiscal 2017, RWE AG purchased a total of 340,960 RWE com-

cates. Preferred shares have no voting rights. Under certain condi-

mon shares for a purchase price of €7,634,911.49 on the capital

tions, preferred shares are entitled to payment of a preference

market. This is equivalent to €872,857.60 of the capital stock

dividend of €0.13 per share, upon allocation of the company’s profits.

(0.06 % of subscribed capital). Employees of RWE AG and its sub-
sidiaries received a total of 340,920 common shares for capital

Pursuant to a resolution passed by the Annual General Meeting on

formation under the employee share plan and 40 common shares

16 April 2014, the Executive Board was authorised to increase the

for service anniversaries. This generated total proceeds of

company’s capital stock with the Supervisory Board’s approval by up

€7,581,949.81. The differences to the purchase price were offset

to €314,749,693.44 until 15 April 2019 through the issue of up to

against freely available retained earnings.

122,949,099 bearer common shares in return for contributions in

cash and /or in kind (approved capital). In certain cases, with the

Furthermore, 4,080 RWE common shares were purchased on the

approval of the Supervisory Board, the subscription rights of share-

capital market by innogy SE for a purchase price of €74,822.64.

holders can be excluded.

This is equivalent to €10,444.80 of the capital stock (0.00066 % of

subscribed capital). Employees of innogy SE and its subsidiaries re-

Pursuant to a resolution passed by the Annual General Meeting on

ceived 4,000 common shares for service anniversaries and a total of

16 April 2014, the Company was authorised until 15 April 2019 to

80 common shares for capital formation under the employee share plan.

acquire any kind of shares of the Company up to a volume of 10 %

This generated total proceeds of €67,171.02. The difference to the

of the capital stock at the time when this authorisation becomes

purchase price was recognised by innogy SE with an effect on expenses.

effective, or if the following is lower, at the time when this authori-

sation is exercised. Based on the authorisation, the Executive Board

Pursuant to IAS 32, the following hybrid bond issued by Group

is also authorised to cancel treasury shares without a further resolu-

companies must be classified as equity.

tion by the Annual General Meeting. Moreover, the Executive Board

is authorised to transfer or sell such shares to third parties under

certain conditions and excluding shareholders’ subscription rights.

Furthermore, treasury shares may be issued to holders of option or

convertible bonds. The Executive Board is also authorised to use the

treasury shares to discharge obligations from future employee share

schemes; in this regard, shareholders’ subscription rights shall be

excluded.

Hybrid bonds
Issuer

RWE AG

Nominal
value

£750 million

First call
date

2019

Coupon
in % p.a.1

7.0

1 Until the first call date.

Proceeds from the bond issue were reduced by the capital procure-

ment costs and added to equity, taking account of taxes. Interest

No treasury shares were held as of 31 December 2017.

payments to bondholders will be booked directly against equity,

after deduction of taxes. Such payments can be deferred by the

company; under certain circumstances, however, they must be made

up again, for example if the Executive Board and Supervisory Board

propose to the Annual General meeting that a dividend be paid.

122 RWE Annual Report 2017

As a result of equity capital transactions with subsidiary companies

which did not lead to a change of control, the share of equity attrib-

Dividend proposal
We propose to the Annual General Meeting that RWE AG’s distribut-

utable to RWE AG’s shareholders changed by a total of – €4 million

able profit for fiscal 2017 be appropriated as follows:

(previous year: €1,425 million) and the share of equity attributable

to other shareholders changed by a total of – €15 million (previous

Distribution of a dividend of €0.50 and a special dividend of €1.00

year: €1,162 million). In the previous year, the shares of the Group’s

from the nuclear fuel tax refund per individual dividend-bearing

equity attributable to RWE AG shareholders rose substantially due to

common and preferred share.

the difference between the consideration received for the shares

sold and the carrying amount allocable to the shares sold within the

Dividend

scope of the IPO of innogy SE.

Accumulated other comprehensive income reflects changes in
the fair values of financial instruments available for sale, cash flow

Profit carryforward

Distributable profit

€922,118,248.50

€97,501.60

€922,215,750.10

hedges and hedges of the net investment in foreign operations,

Based on a resolution of RWE AG’s Annual General Meeting on

as well as changes stemming from foreign currency translation

27 April 2017, the dividend for fiscal 2016 amounted to €0.13 per

adjustments from foreign financial statements.

dividend-bearing preferred share. Distribution for holders of com-

mon shares was suspended. The dividend payment to shareholders

of RWE AG amounted to €5 million.

As of 31 December 2017, the share of accumulated other compre-
hensive income attributable to investments accounted for using the

equity method amounted to €11 million (previous year: €26 million).

During the reporting year, €13 million in differences from currency

translation which had originally been recognised without an effect

on income were realised as an expense (previous year: income of

€1 million). Income and expenses of investments accounted for using

the equity method which had previously been recognised pro rata

without an effect on income were realised in the amount of €0 million

as an expense (previous year: €2 million) during the year under review.

Consolidated financial statements > Notes

123

Non-controlling interests
The share ownership of third parties in Group entities is presented

in this item.

The income and expenses recognised directly in equity (other

comprehensive income – OCI) include the following non-controlling

interests:

Non-controlling interests in OCI
€ million

Actuarial gains and losses of defined benefit pension plans and similar obligations

Pro-rata income and expenses of investments accounted for using the equity method

Income and expenses recognised directly in equity, not to be reclassified through profit or loss

Currency translation adjustment

Fair valuation of financial instruments available for sale

Fair valuation of financial instruments used for hedging purposes

Pro-rata income and expenses of investments accounted for using the equity method

Income and expenses recognised directly in equity, to be reclassified through profit or loss in the future

Material non-controlling interests of the innogy Group:

Subsidiaries with material non-controlling interests

€ million

Balance sheet

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Statement of comprehensive income

Revenue

Other comprehensive income

Total comprehensive income

Cash flows from operating activities

Non-controlling interests

Dividends paid to non-controlling interests

Income of non-controlling interests

Shareholdings of non-controlling interests

In addition to the 23.2 % share accounted for by non-controlling

interests disclosed, there are also non-controlling interests in sub-

sidiaries of innogy SE.

2017

165

– 14

151

− 2

– 3

186

2016

182

− 29

153

− 219

− 193

− 40

innogy Group

31 Dec 2017

31 Dec 2016

36,502

10,312

22,913

12,649

41,119

722

1,871

2,654

4,135

469

492

23.2 %

36,239

10,651

24,442

11,781

41,549

− 457

1,329

2,674

3,997

231

219

23.2 %

124 RWE Annual Report 2017

(22) Share-based payment
For executives of RWE AG and innogy SE as well as of subordinate

innogy SE. Executives receive a number of conditionally granted vir-

tual shares (performance shares). The final number of virtual shares

affiliates, Long Term Incentive Plans (LTIPs) are in place as share-

in a tranche is determined based on the achievement of the adjust-

based payment systems known as Strategic Performance Plans

ed net income target. Each of the issued LTIP SPP tranches has a

(SPPs) and the predecessor model Beat 2010, which is being phased

term of four years before payment is possible. The prerequisite for

out. The expenses associated with these are borne by the Group

participating in the plan was the renouncement of the options of

companies which employ the persons holding notional stocks.

the predecessor model Beat 2010 which had not yet lapsed. The

This LTIP SPP was introduced in 2016. It uses an internal performance

tions. The plan has expired with the exception of some immaterial

large majority of the participants made such renouncement declara-

target (adjusted net income) derived from the mid-term planning and

remaining components.

takes into account the development of share prices of RWE AG and

RWE AG SPP

Start of term

Number of conditionally granted
performance shares

Term

2016 tranche

1 Jan 2016

486,436

4 years

2017 tranche

1 Jan 2017

1,338,027

4 years

Performance target

Adjusted net income

Cap/number of performance shares

Cap/payment amount

Determination of payment

Change in corporate control/merger

150 %

200 %

150 %

200 %

The payment amount is calculated on the basis of the determined number of performance shares multiplied
by the sum of
a) the mathematical average of the closing share price of the RWE common share (ISIN DE 000703129),
with all available decimal places, in Xetra trading of Deutsche Börse AG (or a successor trading system
which subsequently takes the place of the Xetra system) for the last 30 trading days prior to the end of
the vesting period rounded according to standard commercial practice to two decimal places, and

b) the dividend paid per share for the fiscal years between the determination of the final number of perfor-
mance shares and the end of the vesting period. Dividends do not bear interest and are not reinvested.
If a dividend payment occurs during the 30-day period for calculating the share price in accordance with
item a), the share prices of the trading days leading up to the payment (CUM share prices) are adjusted
by the dividend, as the dividend would otherwise be considered twice.

Payment amount = (number of finally granted performance shares) x (mathematical average of the share
price + dividends paid)
The payment amount calculated in this manner is limited to no more than 200 % of the grant amount.

A change in corporate control (‘change of control’) shall occur if
a) a shareholder gains control in accordance with Sec. 29 of the German Securities Acquisition and Takeover
Act (WpÜG) by holding at least 30 % of the voting rights including third-party voting rights attributable
to it in accordance with Sec. 30 WpÜG, or

b) a control agreement in accordance with Sec. 291 of the Stock Corporation Act (AktG) is concluded with

RWE AG as the dependent company, or

c) RWE AG is merged with another legal entity that does not belong to the Group in accordance with Sec. 2
of the German Company Transformation Act (UmwG), unless the value of the other legal entity is less than
50 % of the value of RWE AG based on the agreed conversion rate; in such a case, item a) shall not apply.
In the event of a change of control, all of the performance shares which have been fully granted and have
not been paid out shall be paid out early. The payment amount is determined according to the exercise con-
ditions, with the deviation that the last 30 trading days prior to the announcement of the change in control
is to be used; plus the dividends paid per share in the fiscal years between the determination of the final
number of performance shares and the time of the change in control. The payment amount calculated in
this manner shall be paid to the plan participant together with his or her next salary payment.
All conditionally granted performance shares as of the effective date of the change of control shall lapse
without consideration.

Form of settlement

Payment date

Cash settlement

2020

2021

Consolidated financial statements > Notes

125

innogy SE SPP

Start of term

Number of conditionally
granted performance shares

Term

2016 tranche

1 Jan 2016

352,834

4 years

2017 tranche

1 Jan 2017

1,178,133

4 years

Performance target

Adjusted net income

Cap/number of performance shares

Cap/payment amount

Determination of payment

Change in corporate control/merger

150 %

200 %

150 %

200 %

The payment amount is calculated on the basis of the determined number of finally granted performance
shares multiplied by the sum of
a) the mathematical average of the closing share price (including all available decimal places) of the innogy SE

share (ISIN DE 000A2AADD2) in Deutsche Börse AG’s Xetra trading (or a successor trading system
which subsequently takes the place of the Xetra system) for the last 30 trading days prior to the end of
the vesting period rounded to two decimal places according to standard commercial practice and

b) the dividends paid per share for the fiscal years between the determination of the final number of per-
formance shares and the end of the vesting period. Dividends do not bear interest and are not reinvest-
ed. If a dividend payment occurs during the 30-day period for calculating the share price in accordance
with item a), the share prices of the trading days leading up to the payment (CUM share prices) are ad-
justed by the dividend, as the dividend would otherwise be considered twice.

A change in corporate control (‘change of control’) shall occur if
a) a shareholder obtains control in the sense of Sec. 29 of the German Securities Acquisition and Takeover
Act (WpÜG) by acquiring at least 30 % of the voting right, including the voting rights of third parties
which can be attributed to the shareholder pursuant to Sec. 30 of WpÜG, whereby RWE AG or an RWE
Group company may no longer have control in the sense of Sec. 29 of WpÜG (30 % of the voting rights), or
b) a control agreement in accordance with Sec. 291 of the Stock Corporation Act (AktG) is concluded with a

company which is not part of the RWE Group with innogy SE as the dependent company, or

c) innogy SE is merged with another legal entity that does not belong to the Group in accordance with Sec. 2
of the German Company Transformation Act (UmwG), unless the value of the other legal entity is less than
50 % of the value of innogy SE based on the agreed conversion rate; in such a case, item a) shall not apply.

In the event of a change of control, all of the performance shares which have been fully granted and have
not been paid out shall be paid out early. The payment amount is determined according to the exercise con-
ditions, with the deviation that the last 30 trading days prior to the announcement of the change in control
is to be used; plus the dividends paid per share in the fiscal years between the determination of the final
number of performance shares and the time of the change in control. The payment amount calculated in
this manner shall be paid to the plan participant together with his or her next salary payment.
All conditionally granted performance shares as of the effective date of the change of control shall lapse
without consideration.

Form of settlement

Payment date

Cash settlement

2020

2021

126 RWE Annual Report 2017

The fair value of the performance shares conditionally granted un-

der SPP included the following sums on the grant date:

Performance Shares from the RWE AG SPP
€

2016 tranche

2017 tranche

Fair value per share

13.78

11.62

Performance Shares from the innogy SE SPP
€

2016 tranche

2017 tranche

Fair value per share

37.13

32.07

The fair values of the tranches are based on RWE AG’s/innogy SE’s

granted SPP (= option strike) established in the plan conditions, the

current share price plus the dividends per share which have already

discount rates relative to the remaining term as well as the volatili-

been paid to the shareholders during the term of the corresponding

ties and expected dividends of RWE AG/innogy SE were considered in

tranche. The limited payment per SPP was implemented via a sold

determining the option price. The performance shares displayed the

call option. The option value calculated using the Black Scholes

following development in the fiscal year that just came to a close

Model was deducted. The maximum payments per conditionally

Performance Shares from the RWE AG SPP

2016 tranche

2017 tranche

Outstanding at the start of the fiscal year

Granted

Change (granted/expired)

Paid out

486,436

– 40,401

1,338,027

Outstanding at the end of the fiscal year

446,035

1,338,027

Payable at the end of the fiscal year

Performance Shares from the innogy SE SPP

2016 tranche

2017 tranche

Outstanding at the start of the fiscal year

Granted

Change (granted/expired)

Paid out

352,834

107,738

1,178,133

Outstanding at the end of the fiscal year

460,572

1,178,133

Payable at the end of the fiscal year

During the period under review, expenses for the share-based pay-

ment system totalled €19 million (previous year: €5 million). As of

the balance-sheet date, provisions for cash-settled share-based

payment programmes amounted to €25 million (previous year:

€6 million).

Consolidated financial statements > Notes

127

(23) Provisions

Provisions
€ million

Provisions for pensions and similar obligations

Provisions for nuclear waste management

Provisions for mining damage

Other provisions

Staff-related obligations (excluding restructuring)

Restructuring obligations

Provisions for taxes

Purchase and sales obligations

Provisions for dismantling wind farms

Other dismantling and retrofitting obligations

Environmental protection obligations

Interest payment obligations

Obligations to deliver CO2 emission allowances/certificates for
renewable energies

Miscellaneous other provisions

31 Dec 2017

31 Dec 2016

Non-current

Current

Total Non-current

Current

5,420

5,725

2,263

13,408

723

234

1,620

1,208

359

587

108

398

604

5,841

19,249

280

340

844

349

321

1,600

1,472

4,797

5,137

5,420

6,005

2,323

6,761

5,404

2,288

13,748

14,453

1,567

317

1,969

1,529

360

665

146

409

1,600

2,076

10,638

24,386

430

914

1,643

1,219

334

465

123

391

714

6,233

7,295

7,370

633

220

312

289

1,627

1,630

4,805

20,686

12,175

Total

6,761

12,699

2,363

21,823

1,063

1,134

1,955

1,508

334

499

142

432

1,627

2,344

11,038

32,861

Provisions for pensions and similar obligations.
The company pension plan consists of defined contribution and

employer and employees. In the event that RWE terminates the ABP

pension plan, ABP will charge a termination fee. Amongst other

defined benefit plans. The defined benefit commitments mainly

things, this depends on the number of participants in the plan, the

relate to pension benefits based on final salary.

amount of salary and the age structure of the participants. As of

31 December 2017, we had around 2,000 active participants in the

In the reporting period, €45 million (previous year: €44 million)

plan ( previous year: approximately 2,100).

was paid into defined contribution plans. This includes payments

made by RWE for a benefit plan in the Netherlands which covers the

RWE transferred assets to RWE Pensionstreuhand e.V. within the

commitments of various employers. This fund does not provide the

framework of a contractual trust arrangement (CTA) in order to

participating companies with information allowing for the pro-rata

finance the pension commitments of German Group companies.

allocation of defined benefit obligations, plan assets and service

There is no obligation to provide further funds. From the assets held

cost. In the consolidated financial statements, the contributions

in trust, funds were transferred to RWE Pensionsfonds AG to cover

are thus recognised analogously to a defined contribution plan,

pension commitments to most of the employees who have already

although this is a defined benefit plan. The pension plan for em-

retired. RWE Pensionsfonds AG falls under the scope of the Act on

ployees in the Netherlands is administered by Stichting Pensioen-

the Supervision of Insurance Undertakings and oversight by the Fede-

fonds ABP (see www.abp.nl/). Contributions to the pension plan

ral Financial Supervisory Agency (BaFin). Insofar as a regulatory defi-

are calculated as a percentage rate of employees’ salaries and are

cit occurs in the pension fund, supplementary payment shall be

paid by the employees and employers. The rate of the contributions

requested from the employer. Independently of the aforementioned

is determined by ABP. There are no minimum funding obligations.

rules, the liability of the employer shall remain in place. The boards

Approximately €20 million in employer contributions will be paid to

of RWE Pensionstreuhand e.V. and RWE Pensionsfonds AG are

the ABP pension fund in fiscal 2018 (previous year: €16 million). The

responsible for ensuring that the funds under management are used

contributions are used for all of the beneficiaries. If ABP’s funds are

in compliance with the contract and thus fulfil the requirements for

insufficient, it can either curtail pension benefits and future

recognition as plan assets.

post-employment benefits, or increase the contributions of the

128 RWE Annual Report 2017

In the United Kingdom, it is legally mandated that defined benefit

The last technical valuations of the RWE and innogy ESPS sections

plans are provided with adequate and suitable assets to cover

were carried out on 31 March 2016. In sum, they showed a financ-

pension obligations. The corporate pension system in the United

ing deficit of £574.6 million. RWE, innogy and the trustees subse-

Kingdom is managed by the sector-wide Electricity Supply Pension

quently prepared a plan for annual payments to rectify this deficit.

Scheme (ESPS), in which RWE and innogy each have their own

These payments were calculated for the period from 2017 to 2025.

dedicated independent sections. The sections are managed by trustees

The amounts determined were as follows: £106 million for 2017,

which are elected by members of the pension plans or appointed

£76 million annually for 2018 to 2021, and £39.6 million annually

by the funding companies. The trustees are responsible for managing

for 2022 to 2025. In October 2016, an early payment in a nominal

the pension plans. This includes investments, pension payments and

amount of £45.4 million was made. The next valuation has to occur

financing plans. The pension plans comprise the benefit obligations

by 31 March 2019. From this point in time, the company and the

and plan assets for the subsidiaries of the innogy Group and the

trustees have 15 months to approve the technical valuation.

RWE Group. It is required by law to assess the required financing of

the pension plans once every three years. This involves measuring

The payments to settle the deficit are charged to the participating

pension obligations on the basis of conservative assumptions, which

companies on the basis of a contractual agreement. Above and

deviate from the requirements imposed by IFRS. The underlying

beyond this, payments are regularly made to finance the newly

actuarial assumptions primarily include the projected life expectancies

arising benefit obligations of active employees which increase

of the members of the pension plans as well as assumptions

the pension claims.

relating to inflation, imputed interest rates and the market returns
on the plan assets.

Provisions for defined benefit plans are determined using actuarial

methods. We apply the following assumptions:

Calculation assumptions

in %

Discount rate

Wage and salary growth rate

Pension increase rate

31 Dec 2017

31 Dec 2016

Germany

Foreign 1

Germany

2.00

2.35

2.30

3.20

1.80

2.35

Foreign 1

2.50

3.30

1.00, 1.60 and 1.75

2.10 and 3.00

1.00, 1.60 and 1.75

2.20 and 3.10

1 Pertains to benefit commitments to employees of the RWE Group in the UK.

Composition of plan assets (fair value)

31 Dec 2017

31 Dec 2016

€ million

Equity instruments, exchange-traded funds

Interest-bearing instruments

Real estate

Mixed funds 3

Alternative investments

Other 4

Of which:
Level 1
pursuant
to IFRS 13

1,699

Of which:
Level 1
pursuant
to IFRS 13

254

2,109

Foreign 2

662

4,793

364

544

102

922

193

Of which:
Level 1
pursuant
to IFRS 13

3,145

Of which:
Level 1
pursuant
to IFRS 13

761

2,458

Foreign 2

761

4,653

800

936

100

988

169

Germany 1

3,225

6,603

1,427

1,345

381

Germany 1

3,559

6,874

1,326

1,412

241

13,429

2,709

6,570

2,371

13,031

4,981

6,571

3,226

1 Plan assets in Germany primarily pertain to assets of RWE AG and other Group companies which are managed by RWE Pensionstreuhand e.V. as a trust, as well

as to assets of RWE Pensionsfonds AG.

2 Foreign plan assets pertain to the assets of two UK pension funds for covering benefit commitments to employees of the RWE Group in the UK.
3 Includes equity and interest-bearing instruments.
4 Includes reinsurance claims against insurance companies and other fund assets of provident funds.

Consolidated financial statements > Notes

129

The investment policy in Germany is based on a detailed analysis of

term. Furthermore, in order to achieve consistently high returns, there

the plan assets and the pension commitments and the relation of

is also investment in products which offer relatively regular positive

these two items to each other, in order to determine the best possi-

returns over time. This involves products with returns which fluctu-

ble investment strategy (Asset Liability Management Study). Using

ate similar to those of bond investments, but which achieve an addi-

an optimisation process, portfolios are identified which can earn the

tional return over the medium term, such as so-called absolute return

best targeted results at a defined level of risk. One of these efficient

products (including funds of hedge funds).

portfolios is selected and the strategic asset allocation is determined;

furthermore, the related risks are analysed in detail.

In the United Kingdom, the capital investment takes account of the

structure of the pension obligations as well as liquidity and risk mat-

The focus of the strategic investment policy is on domestic and foreign

ters. The goal of the investment strategy in this context is to main-

government bonds. In order to increase the average yield, corporate

tain the level of pension plan funding and ensure the full financing

bonds with a higher yield are also included in the portfolio. The ratio

of the pension plans over time. To reduce financing costs, higher-risk

of equities in the portfolio is lower than that of bonds. Investment

investments are also made, with a view to earning surplus returns.

occurs in various regions. The investment position in equities is in-

The capital investment focusses on government and corporate bonds.

tended to earn a risk premium over bond investments over the long

Pension provisions for pension commitments changed as follows:

Changes in pension provisions

€ million

Balance at 1 Jan 2017

Current service cost

Interest cost/income

Return on fund assets less interest components

Gain/loss on change in demographic assumptions

Gain/loss on change in financial assumptions

Experience-based gains/losses

Currency translation adjustments

Employee contributions to funded plans

Employer contributions to funded plans 1

Benefits paid by funded plans 2

Changes in the scope of consolidation/transfers

Past service cost

General administration expenses

Change in capitalised surplus of plan assets

Balance at 31 Dec 2017

of which: domestic

of which: foreign

Present value of
pension
commitments

Fair value of plan
assets

Capitalised
surplus of plan
assets

26,334

325

501

– 145

– 528

– 89

– 246

– 1,069

278

– 57

25,316

18,613

6,703

19,602

381

744

– 233

476

– 980

– 6

19,999

13,429

6,570

103

Total

6,761

325

120

– 744

– 145

– 528

– 89

– 13

– 476

– 89

275

– 57

5,420

5,287

133

1 Of which: €190 million from initial and subsequent transfers to plan assets and €286 million in cash flows from operating activities.
2 Contained in cash flows from operating activities.

130 RWE Annual Report 2017

Changes in pension provisions

€ million

Balance at 1 Jan 2016

Current service cost

Interest cost /income

Return on fund assets less interest components

Gain /loss on change in demographic assumptions

Gain /loss on change in financial assumptions

Experience-based gains /losses

Currency translation adjustments

Employee contributions to funded plans

Employer contributions to funded plans 1

Benefits paid by funded plans 2

Changes in the scope of consolidation

Past service cost

General administration expenses

Change in capitalised surplus of plan assets

Balance at 31 Dec 2016

of which: domestic

of which: foreign

Present value of
pension
commitments

Fair value of plan
assets

Capitalised
surplus of plan
assets

24,804

290

632

110

3,031

− 664

− 1,064

− 1,037

278

− 59

26,334

19,266

7,068

18,977

498

1,409

− 970

637

− 953

− 9

19,602

13,031

6,571

1 Of which: €382 million from initial and subsequent transfers to plan assets and €255 million in cash flows from operating activities.
2 Contained in cash flows from operating activities.

Changes in the actuarial assumptions would lead to the following

changes in the present value of the defined benefit obligations:

Sensitivity analysis of pension provisions

€ million

Change in the discount rate by + 50 /− 50 basis points

– In Germany

– Outside Germany

Change in the wage and salary growth rate by − 50 /+ 50 basis points

– In Germany

– Outside Germany

Change in the pension increase rate by − 50 /+ 50 basis points

– In Germany

– Outside Germany

Increase of one year in life expectancy

– In Germany

– Outside Germany

Change in the present value of defined benefit obligations

31 Dec 2017

31 Dec 2016

– 1,370

– 485

– 151

– 61

– 937

– 350

− 1,418

− 522

− 151

− 65

− 991

− 380

1,554

554

158

1,027

394

772

245

Total

5,842

290

134

− 1,409

110

3,031

− 664

− 94

− 637

− 84

278

− 59

6,761

6,264

497

1,602

596

159

1,087

416

779

260

Consolidated financial statements > Notes

131

The sensitivity analyses are based on the change of one assumption

In fiscal 2017, past service costs predominantly consisted of effects

each, with all other assumptions remaining unchanged. Actual

related to restructuring measures in Germany and the remeasurement

developments will probably be different than this. The methods of

of one of our pension schemes. In the previous year, the past service

calculating the aforementioned sensitivities and for calculating the

cost was primarily based on restructuring measures in Germany.

pension provisions are in agreement. The dependence of pension

provisions on market interest rates is limited by an opposite effect.

Domestic company pensions are subject to an obligation to review

The background of this is that the commitments stemming from

for adjustment every three years pursuant to the Act on the

company pension plans are primarily covered by funds, and mostly

Improvement of Company Pensions (Sec 16 of the German Company

plan assets exhibit negative correlation with the market yields of

Pension Act (BetrAVG)). Additionally, some commitments grant

fixed-interest securities. Consequently, declines in market interest

annual adjustments of pensions, which may exceed the legally

rates are typically reflected in an increase in plan assets, whereas

mandated adjustment obligation.

rising market interest rates are typically reflected in a reduction in

plan assets.

Some domestic pension plans guarantee a certain pension level,

taking into account the statutory pension (total retirement earnings

The present value of pension obligations, less the fair value of the

schemes). As a result, future reductions in the statutory pension can

plan assets, equals the net amount of funded and unfunded pension

result in higher pension payments by RWE.

obligations.

The recognised amount of pension provisions totalled €3,694 million

The weighted average duration of the pension obligations was
16 years in Germany (previous year: 16 years) and 16 years outside

for funded pension plans (previous year: €4,883 million) and

of Germany (previous year: 16 years).

€1,726 million for unfunded pension plans (previous year:

€1,878 million).

In fiscal 2018, payments for defined benefit plans are expected to

amount to €400 million (previous-year target: €500 million), as

direct benefits and payments into plan assets.

Provisions for nuclear energy and mining

Balance at
1 Jan 2017

Additions

Unused
amounts
released

Interest
accretion

Amounts
used

Balance at
31 Dec 2017

Changes in
the scope of
consoli-
dation,
currency
adjustments,
transfers

€ million

Provisions for nuclear waste management

Provisions for mining damage

12,699

2,363

15,062

469

544

− 111

109

133

− 7,187

− 69

− 7,256

− 44

6,005

2,323

8,328

Provisions for nuclear waste management are recognised in the
full amount for the nuclear power plants Biblis A and B, Mülheim-

€24.1 billion into the fund. RWE’s share totalled €6.8 billion, con-

sisting of the base amount pursuant to the German Nuclear Waste

Kärlich, Emsland and Lingen, and at a rate of 75 % for the nuclear

Disposal Fund Act plus €5.0 billion in interest as well as a 35.47 %

power plant Gundremmingen A, B and C, in accordance with RWE’s

risk surcharge in the amount of €1.8 billion. The obligation reported

share in the nuclear obligations. Provisions for waste disposal for the

under provisions for nuclear waste management in the balance

Dutch nuclear power plant Borssele are included at a rate of 30 %, in

sheet is somewhat higher, at €7.0 billion, because it included obli-

line with RWE’s stake.

gations resulting from E.ON’s minority share in the Emsland nuclear

power plant, which was attributable to E.ON in an economic sense.

The law on the restructuring of responsibilities for nuclear waste

disposal was enacted on 16 June 2017. According to the law, the

RWE’s remaining provisions for nuclear waste disposal are almost

Federal government is responsible for handling and financing the

exclusively reported as non-current provisions, and their settlement

intermediate and final storage of radioactive waste, while responsi-

amount is discounted to the balance-sheet date. Based on the cur-

bility for the decommissioning and dismantling of the facilities and

rent state of planning, we will use most of these provisions by 2045.

packing of the radioactive waste remains with the companies. The

The discount rate calculated on the basis of the current level of

responsibilities transferred to the Federal government are financed

market interest rates was 0.6 % as of the balance-sheet date (previous

from a fund, which is paid into by the plant operators. On 3 July 2017,

year: 0.4 %). The escalation rate based on expectations with regard

the nuclear power plant operators paid the full funding sum of

to general increases in wages and prices, and productivity growth

132 RWE Annual Report 2017

was 1.5 % (previous year: 1.3 %). As a result, the real discount rate

The provisions of the law on the reassignment of responsibility for

used for nuclear waste management purposes, which is the differ-

nuclear waste disposal stipulates that accountability for the

ence between the discount rate and the escalation rate, amounted

shutdown and dismantling of the assets as well as for packaging

to – 0.9 % (previous year: – 0.9 %). An increase ( decrease) in this rate

radioactive waste remains with the companies. The shutdown and

by 0.1 percentage point would reduce ( increase) the present value

dismantling process encompasses all activities following the final

of the provision by roughly €50 million.

termination of production by the nuclear power plant until the plant

site is removed from the regulatory scope of the Nuclear Energy Act.

Excluding the interest accretion, additions to provisions for nuclear

Actual dismantling begins after a several-year post-operation phase,

waste management amount to €469 million (previous year: €1,851 mil-

during which the fuel assemblies, operating equipment and radio-

lion). Besides quantity- related increases in the provisions, additions

active operational waste are removed from the facility and the approval

to provisions are due to the fact that the current estimates resulted

process is completed. Dismantling operations essentially consist of

in a net increase in the anticipated nuclear waste management

the dismantling of the facilities, removal of the radio active contami-

costs. The interest accretion in the additions to provisions for nuclear

nation from the structures, radiation protection, and regulatory

waste management amounted to €24 million (previous year:

monitoring of the dismantling measures and residual operations.

€1,303 million). Of the changes in provisions, €272 million (previous

year: €349 million) was capitalised under the corresponding costs

Provisions for the residual operation of nuclear power station facili-

of nuclear power plants and fuel elements still in operation. Prepay-

ties that cover all steps that must be taken largely independent of

ments for services in the amount of €8 million (previous year:
€166 million) were deducted from these provisions. In the reporting

dismantling and disposal but are necessary to ensure that the assets
are safe and in compliance with permits or are required by the author-

period, we also used provisions of €131 million for the decommis-

ities are stated separately. In addition to works monitoring and facility

sioning of nuclear power plants (previous year: €135 million). Decom-

protection, these mainly include radiation and fire protection as well

missioning and dismantling costs had originally been capitalised in a

as infrastructural adjustments.

corresponding amount and reported under the cost of the power plants.

The German Nuclear Energy Act (AtG) requires RWE to harmlessly

clude all work done to dismantle plants, parts of plants, systems and

dispose of radioactive materials and dismantled or decommissioned

components as well as on buildings that must be dismantled to

radioactive components of facilities or to properly dispose of such

comply with the Nuclear Energy Act. They also consider the conven-

as radioactive waste (final direct storage). We took the transfer of

tional dismantling of nuclear power plant facilities to fulfil legal or

Provisions for the dismantling of nuclear power plant facilities in-

the obligation to implement and finance the interim and final

other obligations.

storage of nuclear waste as an occasion to subdivide our remaining

provisions for nuclear waste management. In the future, we will

Provisions for residual material processing and waste management

structure them to reflect the residual operation of nuclear power

include the costs of processing radioactive operational waste pro-

plants, the dismantling of nuclear power station facilities as well

duced during the plant’s service life and that will be produced by

as the cost of residual material processing and radioactive waste

dismantling operations. This includes the various processes for

treatment facilities.

Provisions for nuclear waste management
€ million

Residual operation

Dismantling

Processing of residual material and waste
management

31 Dec 2017

31 Dec 2016

waste to third parties commissioned by the Federal government for

conditioning, packaging of the low-level and intermediate-level radio-

active waste in suitable containers and the transportation of such

2,577

1,766

1,662

6,005

2,195

1,673

8,831

12,699

intermediate storage. This item also contains the cost of transport-

ing the waste produced by recycling and the cost of the proper pack-

aging of spent nuclear fuel elements, i.e. the cost of loading and

procuring freight and interim storage containers. In the previous

year, this item also included the amount transferred to the fund.

Consolidated financial statements > Notes

133

Commissioned by the plant operator, the internationally renowned

company NIS Ingenieurgesellschaft mbH (NIS), Alzenau, assesses the

Provisions for mining damage also consist almost entirely of
non-current provisions. They are reported at the settlement amount

prospective residual operation and dismantling costs for the nuclear

discounted to the balance-sheet date. In addition to continuous

power plants on an annual basis. The costs are determined specifi-

recultivation of opencast mine sites until 2045, this is expected to

cally for each facility and take into consideration the current state of

cover a large part of the claims for site restoration of lignite open-

the art, regulatory requirements and previous practical experience

cast mining areas for the period 2030 to 2100. The cost estimates

from ongoing and completed dismantling projects. Additionally, cur-

are to a great extent based on external expert opinions.

rent developments are also incorporated into the cost calculations.

They also include the cost of conditioning and packaging radioactive

Due to the long-term nature of the obligations, both the escalation

waste generated during dismantling operations and the transporta-

rate and the discount rate are determined as the average values for

tion of such waste to third parties commissioned by the Federal gov-

a longer period in the past. Since the development of inflation has

ernment for intermediate storage. In addition, further cost estimates

an impact both on the fulfilment amounts and the level of interest

for the disposal of radioactive waste are based on contracts with

rates, this approach results in a consistent real discount rate specific

foreign reprocessing companies and other disposal companies. Further-

to the provisions, as the difference between the discount rate and

more, they are based on plans by internal and external experts, in

the escalation rate. Due to developments in long-term interest rates

particular GNS Gesellschaft für Nuklear-Service mbH, (GNS) Essen.

on the capital markets, the discount rate was lowered from 4.4 % to

In terms of their contractual definition, provisions for nuclear waste
management break down as follows:

into consideration anticipated future increases in costs and prices,
as well as a risk premium, declined to the same degree, from 3.1 %

4.2 % in the 2017 reporting year. The escalation rate, which takes

Provisions for nuclear waste management
€ million

Provisions for nuclear obligations,
not yet contractually defined

Provisions for nuclear obligations,
contractually defined

31 Dec 2017

31 Dec 2016

is the difference between the discount rate and the escalation rate,

to 2.9 %. The real discount rate applied for mining purposes, which

thus remained unchanged at 1.3 %. An increase (decline) in the

real discount rate by 0.1 percentage point would reduce (increase)

4,453

4,046

the present value of the provision by around €70 million.

1,552

6,005

8,653

12,699

Excluding the interest accretion, additions to provisions for mining

damage amounted to €75 million (previous year: €154 million)

in the reporting period. The reason for this was quantity-induced

increases in the obligatory volume, of which €48 million (previous

The provision for obligations which are not yet contractually defined

year: €108 million) was capitalised under ‘Property, plant and equip-

covers the costs of the remaining operational phase of the operat-

ment’. Releases of provisions in the amount of €111 million (pre-

ing plants, the costs of dismantling as well as the residual material

vious year: €203 million) resulted in part from the fact that current

processing and waste treatment costs incurred in connection with

estimates led to a reduction in the anticipated costs of restoration.

waste produced as a result of shutdowns.

The interest accretion increased provisions for mining damage by

€109 million (previous year: €99 million).

Provisions for contractually defined nuclear obligations relate to all

obligations the value of which is specified in contracts under civil

law. The obligations include the anticipated residual costs of repro-

cessing and returning the resulting radioactive waste. These costs

stem from existing contracts with foreign reprocessing companies

and with GNS. Moreover, these provisions also include the costs for

transport and intermediate storage containers for and the loading

of spent fuel assemblies within the framework of final direct storage.

Furthermore, this item also includes the amounts for the professional

packaging of radioactive operational waste as well as the in-house

personnel costs incurred for the residual operation of plants which

are permanently decommissioned. The previous year’s figure also

included the sum transferred to the fund.

134 RWE Annual Report 2017

Other provisions

Balance at
1 Jan 2017

Additions

Unused
amounts
released

Interest
accretion

Amounts
used

Balance at
31 Dec 2017

Changes in
the scope
of consoli-
dation,
currency
adjust-
ments,
transfers

€ million

Staff-related obligations (excluding restructuring)

Restructuring obligations

Provisions for taxes

Purchase and sales obligations

Provisions for dismantling wind farms

Other dismantling and retrofitting obligations

Environmental protection obligations

Interest payment obligations

Obligations to deliver CO2 emission allowances/
certificates for renewable energies

Miscellaneous other provisions

1,063

1,134

1,955

1,508

334

499

142

432

1,627

2,344

11,038

719

119

347

591

1,814

685

4,370

− 24

− 39

− 76

− 349

− 29

− 22

− 4

− 26

− 219

− 788

− 3

− 4

− 22

576

− 855

− 5

114

− 40

− 175

− 370

− 764

− 43

− 265

− 223

– 21

– 2

− 11

− 1,801

− 537

− 3,667

1,567

317

1,969

1,529

360

665

146

409

1,600

2,076

10,638

Provisions for taxes primarily consist of income taxes.

for restructuring obligations to provisions for staff-related obliga-

tions as soon as the underlying restructuring measure has been

Provisions for staff-related obligations mainly consist of provisions
for pre-retirement part-time work arrangements, severance, out-

specified. This is the case if individual contracts governing socially

acceptable payroll downsizing are signed by affected employees.

standing vacation and service jubilees and performance-based pay

components. Based on current estimates, we expect most of these

to be used from 2018 to 2025.

Provisions for purchase and sales obligations primarily relate to
contingent losses from pending transactions.

Provisions for restructuring obligations pertain mainly to meas-
ures for socially acceptable payroll downsizing. We currently expect

most of these to be used from 2018 to 2025. In so doing, sums

earmarked for personnel measures are reclassified from provisions

From the current perspective, it is expected that the majority of the
provisions for the dismantling of wind farms will be used from
2020 to 2037, and the other dismantling and retrofitting obliga-
tions are expected to be used from 2018 to 2060.

(24) Financial liabilities

Financial liabilities

€ million

Bonds payable1

Commercial paper

Bank debt

Other financial liabilities

Collateral for trading activities

Miscellaneous other financial liabilities

1 Including hybrid bonds classified as debt as per IFRS.

31 Dec 2017

31 Dec 2016

Non-current

Current

Non-current

Current

12,059

1,333

1,022

14,414

990

456

261

389

691

2,787

13,619

1,434

988

16,041

100

532

236

569

705

2,142

Consolidated financial statements > Notes

135

€12,633 million of the non-current financial liabilities were interest-

In October 2017, RWE AG bought back a nominal €585 million in

bearing liabilities (previous year: €14,859 million).

hybrid bonds outstanding as part of a hybrid bond buyback pro-

gramme. The partial repurchase was allocated as follows:

The legal transfer of RWE AG’s liabilities arising from senior bonds to

innogy SE was completed successfully at the end of February 2017.

• €161 million to the bond with an earliest call date in 2020

As a result, innogy SE replaced RWE AG as guarantor of the publicly

• €268 million to the bond with an earliest call date in 2025

placed bonds and as debtor of the privately placed bonds. Loans of

• US$183 million to the bond with an earliest call date in 2026

€645 million and £350 million granted us by the European Investment

Bank (EIB) were also transferred by RWE AG to innogy SE via a debt-

innogy issued its first senior bond on 5 April 2017. The bond has a

or exchange in the middle of July 2017.

volume of €750 million, a tenor of eight years, and a coupon of 1 %.

innogy placed a further bond on 12 October 2017 – a green bond

At the earliest possible dates, RWE AG cancelled and redeemed a

with a volume of €850 million, a tenor of ten years, and a coupon of

hybrid bond of CHF 250 million at the beginning of April 2017, of

1.25 %. innogy SE redeemed a €100 million mature bond in Novem-

CHF 150 million at the end of July 2017, and of US$1,000 million in

ber 2017.

the middle of October 2017.

The following overview shows the key data on the major bonds of

the RWE Group as of 31 December 2017:

Bonds payable
Issuer

innogy Finance B.V.

innogy SE

innogy Finance B.V.

RWE AG/innogy SE

innogy Finance B.V.

innogy SE

RWE AG

Other

Bonds payable 4

Outstanding
amount

€980 million

€1,000 million

€750 million

£570 million

€1,000 million

£500 million

£488 million

€800 million

€750 million

€850 million

£760 million

€600 million

US$50 million

£600 million

€489 million 1

£1,000 million

JPY20 billion

€100 million

€150 million

€539 million 3

€282 million 3

US$317 million 3

Various

Carrying amount
€ million

Coupon in %

Maturity

990

999

748

643

999

561

548

800

744

839

858

596

673

479

1,111

146

536

281

260

13,049

5.125

6.625

1.875

6.5

5.5

July 2018

January 2019

January 2020

April 2021

August 2021

July 2022

5.625

December 2023

3.0

1.0

1.25

6.25

5.75

3.8

4.75

3.5

6.125

4.76 2

3.5

3.55

2.75

3.5

6.625

Various

January 2024

April 2025

October 2027

June 2030

February 2033

April 2033

January 2034

October 2037

July 2039

February 2040

December 2042

February 2043

April 2075

July 2075

Various

1 Of which, €21 million is allocated to RWE AG and €468 million to innogy SE.
2 After swap into euro.
3 Hybrid bonds classified as debt as per IFRS.
4 Including hybrid bonds classified as debt as per IFRS.

136 RWE Annual Report 2017

Other financial liabilities contain finance lease liabilities. Lease

Liabilities arising from finance lease agreements have the following

agreements principally relate to capital goods in the electricity

maturities:

business.

Liabilities from finance
lease agreements

€ million

Due in the following year

Due after 1 to 5 years

Due after 5 years

Maturities of minimum lease payments

31 Dec 2017

31 Dec 2016

Nominal value

Discount

Present value Nominal value

Discount

Present value

197

249

197

248

201

253

201

252

€85 million (previous year: €96 million) of the financial liabilities are

secured by mortgages.

(25) Other liabilities

Other liabilities

€ million

Tax liabilities

Social security liabilities

Restructuring liabilities

Derivatives

Advances and contributions in aid of construction and building connection

Miscellaneous other liabilities

of which: financial debt

of which: non-financial debt

The principal component of social security liabilities are the amounts

payable to social security institutions.

Of the miscellaneous other liabilities, €1,451 million (previous year:

€1,488 million) relate to financial debt in the form of current purchase

price obligations from rights granted to tender non-controlling inter-

ests (put options).

31 Dec 2017

31 Dec 2016

Non-current

Current

Non-current

Current

975

1,168

244

2,393

1,033

1,360

725

3,282

168

2,841

7,082

5,337

1,745

765

1,187

237

2,196

816

1,380

829

4,938

159

2,896

8,887

7,143

1,744

Consolidated financial statements > Notes

137

Other information

(26) Earnings per share
Basic and diluted earnings per share are calculated by dividing

corporate business plan data. Current market interest rates correspond-

ing to the remaining maturity or maturity are used for discounting.

the portion of net income attributable to RWE shareholders by the

average number of shares outstanding; treasury shares are not

Derivative financial instruments are recognised at their fair values

taken into account in this calculation. The earnings per share are

as of the balance-sheet date, insofar as they fall under the scope of

the same for both common and preferred shares.

IAS 39. Exchange-traded products are measured using the published

Earnings per share

Net income for RWE AG
shareholders

Number of shares outstanding
(weighted average)

Basic and diluted earnings per
common and preferred share

Dividend per common share

Dividend per preferred share

1 Proposal for fiscal 2017.

2017

2016

products are measured on the basis of publicly available broker

closing prices of the relevant exchange. Non-exchange traded

quotations or, if such quotations are not available, on generally

€ million

1,900

– 5,710

accepted valuation methods. In doing so, we draw on prices on

thousands

614,745

company-specific planning estimates are used in the measurement

active markets as much as possible. If such are not available,

€

3.09

1.501

process. These estimates encompass all of the market factors which

– 9.29

other market participants would take into account in the course of

price determination. Assumptions pertaining to the energy sector

0.13

and economy are made within the scope of a comprehensive process
with the involvement of both in-house and external experts.

(27) Reporting on financial instruments
Financial instruments are divided into non-derivative and derivative.

Non-derivative financial assets essentially include other non-current

Measurement of the fair value of a group of financial assets and

financial liabilities is conducted on the basis of the net risk exposure

per business partner, in accordance with IFRS 13.48.

financial assets, accounts receivable, marketable securities and cash

The following overview presents the classifications of financial

and cash equivalents. Financial instruments in the category ‘Availa-

instruments measured at fair value in the fair value hierarchy

ble for sale’ are recognised at fair value, and other non-derivative

prescribed by IFRS 13. In accordance with IFRS 13, the individual

financial assets at amortised cost. On the liabilities side, non-deriva-

levels of the fair value hierarchy are defined as follows:

tive financial instruments principally include liabilities recorded at

amortised cost.

• Level 1: Measurement using (unadjusted) prices of identical

financial instruments formed on active markets;

The fair value of financial instruments ‘Available for sale’ which are

• Level 2: Measurement on the basis of input parameters which

reported under other financial assets and securities is the published

are not the prices from Level 1, but which can be observed for

exchange price, insofar as the financial instruments are traded on an

the financial instrument either directly (i.e. as price) or indirectly

active market. The fair value of non-quoted debt and equity instru-

(i.e. derived from prices);

ments is determined on the basis of discounted expected payment

• Level 3: Measurement using factors which cannot be observed on

flows, taking into consideration macro-economic developments and

the basis of market data.

Fair value hierarchy
€ million

Other financial assets

Derivatives (assets)

of which: used for hedging purposes

Securities

Derivatives (liabilities)

of which: used for hedging purposes

Total
2017

1,109

4,263

1,456

4,893

4,257

643

Level 1

Level 2

Level 3

3,168

208

4,230

1,456

1,725

4,253

643

821

Total
2016

1,055

6,494

2,175

9,825

5,703

1,240

Level 1

Level 2

Level 3

6,776

202

6,455

2,175

3,049

5,685

1,240

789

138 RWE Annual Report 2017

The development of the fair values of Level 3 financial instruments

is presented in the following table:

Level 3 financial instruments:
Development in 2017

Balance at
1 Jan 2017

€ million

Other financial assets

Derivatives (assets)

Derivatives (liabilities)

789

Level 3 financial instruments:
Development in 2016

Balance at
1 Jan 2016

€ million

Other financial assets

Derivatives (assets)

Derivatives (liabilities)

608

Changes in the
scope of
consolidation,
currency
adjustments
and other

− 48

Changes in the
scope of
consolidation,
currency
adjustments
and other

Amounts recognised in profit or loss generated through Level 3

financial instruments relate to the following line items on the

income statement:

Level 3 financial instruments:
Amounts recognised in profit or loss

€ million

Revenue

Cost of materials

Other operating income/expenses

Income from investments

Financial income/finance costs

Total
2017

Of which:
attributable to
financial instruments
held at the
balance-sheet date

– 4

− 3

– 4

− 2

Changes

Balance at
31 Dec 2017

Recognised in
profit or loss

With a
cash effect

Changes

Recognised in
profit or loss

With a
cash effect

− 20

– 10

821

Balance at
31 Dec 2016

789

Of which:
attributable to
financial instruments
held at the
balance-sheet date

− 28

− 10

− 5

100

− 33

− 41

Total
2016

− 28

− 13

− 8

Level 3 derivative financial instruments essentially consist of energy

equal, rising gas prices cause the fair values to increase, whereas

purchase agreements, which relate to trading periods for which

declining gas prices cause them to drop. A change in pricing by

there are no active markets yet. The valuation of such depends on

+ /−10 % would cause the market value to rise by €6 million or

the development of gas prices in particular. All other things being

decline by €6 million.

Consolidated financial statements > Notes

139

The following impairments were recognised on financial assets

which fall under the scope of IFRS 7 and are reported under the

balance-sheet items stated below:

Impairments on financial assets
€ million

Other non-current
financial assets

Financial
receivables

Trade accounts
receivable

Other receivables
and other assets

Balance at 1 Jan 2017

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2017

127

179

233

– 2

241

469

157

− 4

233

397

– 2

Impairments on financial assets
€ million

Other non-current
financial assets

Financial
receivables

Trade accounts
receivable

Other receivables
and other assets

Balance at 1 Jan 2016

Additions

Transfers

Currency translation adjustments

Disposals

Balance at 31 Dec 2016

133

− 21

127

279

− 36

233

627

− 42

− 37

178

469

As of the cut-off date, there were unimpaired, past due receivables

falling under the scope of IFRS 7 in the following amounts:

Total

840

235

− 4

265

819

Total

1.050

138

− 99

− 37

212

840

Receivables, past due

€ million

Financial receivables

Trade accounts receivable

Other receivables and other assets

Receivables, past due

€ million

Financial receivables

Trade accounts receivable

Other receivables and other assets

Gross
amount as
of 31 Dec
2017

Receiva-
bles,
past due,
impaired

2,345

5,808

4,509

12,662

474

495

Gross
amount as
of 31 Dec
2016

Receiva-
bles,
past due,
impaired

2,108

5,467

6,801

14,376

638

660

Receivables not impaired, past due by:

less than
30 days

31 to 60
days

61 to 90
days

91 to 120
days

over 120
days

343

138

142

Receivables not impaired, past due by:

less than
30 days

31 to 60
days

61 to 90
days

91 to 120
days

over 120
days

283

125

155

140 RWE Annual Report 2017

Financial assets and liabilities can be broken down into categories

with the following carrying amounts:

Carrying amounts by category
€ million

Financial assets recognised at fair value through profit or loss

of which: held for trading

Financial assets available for sale

Loans and receivables

Financial liabilities recognised at fair value through profit or loss

of which: held for trading

Financial liabilities carried at (amortised) cost

31 Dec 2017

31 Dec 2016

2,807

6,002

11,692

3,614

19,754

4,319

10,880

11,738

4,463

22,448

The carrying amounts of financial assets and liabilities within the

€4,393 million ( previous year: €5,290 million) to Level 2 of the fair

scope of IFRS 7 basically correspond to their fair values. The only

value hierarchy.

deviations are for bonds, commercial paper, bank debt and other
financial liabilities. The carrying amount of these is €17,201 million

The following net results from financial instruments as per IFRS 7

(previous year: €18,183 million), while the fair value amounts to

were recognised on the income statement, depending on the

€19,167 million (previous year: €20,541 million). Of this, €14,774 mil-

category:

lion (previous year: €15,251 million) is related to Level 1 and

Net gain/loss by category
€ million

Financial assets and liabilities recognised at fair value through profit or loss

of which: held for trading

Financial assets available for sale

Loans and receivables

Financial liabilities carried at (amortised) cost

2017

− 591

158

1,906

− 619

2016

− 1,742

127

192

− 1,084

The net result as per IFRS 7 essentially includes interest, dividends

the value of financial instruments available for sale which had origi-

and results from the measurement of financial instruments at fair value.

nally been recognised without an effect on income was realised as

income (previous year: expense of €58 million).

In fiscal 2017, changes of €74 million (previous year: €20 million)

after taxes in the value of financial assets available for sale were rec-

The following is an overview of the financial assets and financial liabil-

ognised in accumulated other comprehensive income without an

ities which are netted out in accordance with IAS 32 or are subject

effect on income. Above and beyond this, €30 million in changes in

to enforceable master netting agreements or similar agreements:

Netting of financial assets and financial liabilities
as of 31 Dec 2017

Gross amounts
recognised

Amounts set
off

Net amounts
recognised

Related amounts not set off

Net total

€ million

Derivatives (assets)

Derivate (liabilities)

8,204

8,291

– 7,419

− 7,264

785

1,027

− 118

Financial
instruments

Cash
collateral
received/
pledged

– 305

− 318

480

591

Consolidated financial statements > Notes

141

Netting of financial assets and financial liabilities
as of 31 Dec 2016

Gross amounts
recognised

Amounts set
off

Net amounts
recognised

Related amounts not set off

Net total

€ million

Derivatives (assets)

Derivate (liabilities)

8,359

8,441

– 7,221

– 7,695

1,138

746

– 185

Financial
instruments

Cash
collateral
received/
pledged

– 520

– 181

618

380

The related amounts not set off include cash collateral received

The Group’s other financial transactions are recorded using central-

and pledged for over-the-counter transactions as well as collateral

ised risk management software, with RWE AG and innogy SE each

pledged in advance for exchange transactions.

monitoring their own transactions.

As a utility enterprise with international operations, the RWE Group

For commodity operations, risk management directives have been

is exposed to market, credit and liquidity risks in its ordinary business

established by RWE AG’s Controlling & Risk Management Department.

activity. We limit these risks via systematic, groupwide risk manage-

These regulations stipulate that derivatives may be used to hedge

ment. The range of action, responsibilities and controls are defined

price risks, optimise power plant schedules and increase margins.

in binding internal directives.

Market risks stem from changes in exchange rates and share prices
as well as interest rates and commodity prices, which can have an

influence on business results.

Furthermore, commodity derivatives may be traded, subject to
limits. Compliance with limits is monitored daily. innogy does not

hold derivatives for trading purposes.

Risks stemming from fluctuations in commodity prices and financial

market risks (foreign currency risks, interest rate risks, securities

RWE AG manages its fully consolidated subsidiary innogy as a finan-

risks) are monitored and managed by RWE using indicators such as

cial investment and exercise its control over innogy SE via the legal

Value at Risk (VaR), amongst other things. In addition, for the

bodies of the Supervisory Board and its majority influence at the

management of interest rate risk, a Cash Flow at Risk (CFaR) is deter-

Annual General Meeting. One of the results of this is that RWE and

mined. innogy exclusively manages financial risks using these key

innogy each have their own independent management of interest

figures amongst others.

rate, currency, liquidity and credit risks. In accordance with this, the

risk figures from these areas are reported for the respective parts of

Using the VaR method, RWE and innogy determine and monitor the

the Group.

maximum expected loss arising from changes in market prices with

a specific level of probability during specific periods. Historical price

Due to the RWE Group’s international profile, currency management

volatility is taken as a basis in the calculations. With the exception

is a key issue. Sterling and US dollar are two important currencies

of the CFaR data, all VaR figures are based on a confidence interval

for the RWE Group. In certain cases, fuels are traded in these two

of 95 % and a holding period of one day. For CFaR, a confidence in-

currencies. In addition, RWE does business in the UK currency area.

terval of 95 % and a holding period of one year is taken as a basis.

The companies of the RWE Group are required to hedge their for-

eign currency risks via RWE AG or innogy SE, depending on which

In respect of interest rate risks, RWE and innogy distinguish between

part of the Group they belong to. Only these two companies them-

two risk categories: on the one hand, increases in interest rates can

selves may maintain open foreign currency positions, subject to

result in declines in the prices of securities from the holdings of

predefined limits, or approve such limits for their Group companies.

RWE and innogy. This pertains primarily to fixed-rate instruments.

A VaR is determined to quantify securities price risk. As of the balance-

Interest rate risks stem primarily from financial debt and the Group’s

sheet date, it amounted to €2.7 million for RWE (previous year:

interest-bearing investments. We hedge against negative changes

€13.4 million) and €3.2 million for innogy (previous year: €5.0 million).

in value caused by unexpected interest-rate movements using non -

On the other hand, financing costs also increase along with the level

derivative and derivative financial instruments. The financial liabilities

of interest rates. The sensitivity of interest expenses to increases in

and interest-bearing bonds transferred to innogy SE within the scope

market interest rates is measured with CFaR. As of 31 December 2017

of the realignment of RWE are managed exclusively by innogy SE.

this amounted to €3.7 million for RWE (previous year: €0.7 million)

and €10.8 million for innogy (previous year: €1.0 million). Unlike in

Opportunities and risks from changes in the values of non-current

the previous year, innogy’s CFaR as of 31 December 2017 was calcu-

securities are centrally controlled by a professional fund manage-

lated on the basis of the budgeted financing requirement instead of

ment system operated by RWE AG. This also includes fund manage-

the former method, which was merely based on the assumption of

ment for the assets of the innogy subgroup.

the refinancing of maturing debt. Taking account of the new method,

the figure for innogy as of 31 December 2016 would have been

€6.1 million.

142 RWE Annual Report 2017

As of 31 December 2017, the VaR for foreign currency positions was

One of our most important instruments to limit market risk is the

less than €1 million for RWE (previous year: less than €1 million)

conclusion of hedging transactions. The instruments most commonly

and also less than €1 million for innogy (previous year: €1.1 million).

used are forwards and options with foreign currency, interest rate

This corresponds to the figure used internally, which also includes

swaps, interest rate currency swaps, and forwards, options, futures

the underlying transactions for cash flow hedges.

and swaps with commodities.

As of 31 December 2017, the VaR for risks related to the RWE share

Maturities of derivatives related to interest rates, currencies, equities,

portfolio amounted to €2.7 million for RWE (previous year: €1.4 mil-

indices and commodities for the purpose of hedging are based on

lion) and €3.0 million for innogy (previous year: €4.0 million).

the maturities of the underlying transactions and are thus primarily

short term and medium term in nature. Hedges of the foreign cur-

As of 31 December 2017, VaR for the commodity positions of the

rency risks of foreign investments have maturities of up to 21 years.

trading business of RWE Supply & Trading amounted to €7.9 million

(previous year: €9.4 million). This corresponds to the figure used

All derivative financial instruments are recognised as assets or liabili-

for management purposes.

ties and are measured at fair value. When interpreting their positive

and negative fair values, it should be taken into account that, with

In the middle of 2017, we pooled responsibility for the management

the exception of trading in commodities, these financial instruments

of our gas portfolio and our liquefied natural gas (LNG) business in

are generally matched with underlying transactions that carry offset-

a new organisational unit and established a VaR cap of €12 million.
The VaR for the gas and LNG business of RWE Supply & Trading

ting risks.

pooled in the year under review amounted to €2.2 million and corre-

Hedge accounting pursuant to IAS 39 is used primarily for mitigating

sponds to the key figure used for internal control.

currency risks from net investments in foreign entities with foreign

Additionally, stress tests are carried out on a monthly basis in relation

interest rate risks from non-current liabilities, as well as for price risks

functional currencies, risks related to foreign currency items and

to the trading and pooled LNG and gas business of RWE Supply &

from sales and purchase transactions.

Trading to model the impact of commodity price changes on the

earnings conditions and take risk-mitigating measures if necessary.

Fair value hedges are used to limit market price risks related to fixed-

In these stress tests, market price curves are modified, and the com-

interest loans and liabilities. Fixed-interest instruments are trans-

modity position is revalued on this basis. Historical scenarios of

formed into variable-rate instruments, thereby hedging their fair value.

extreme prices and realistic, fictitious price scenarios are modelled. In

Hedging instruments used are interest rate swaps and interest rate

the event that the stress tests exceed internal thresholds, these sce-

currency swaps. In the case of fair value hedges, both the derivative

narios are then analysed in detail in relation to their impact and prob-

as well as the underlying hedged transaction (in relation to the

ability, and – if necessary – risk-mitigating measures are considered.

hedged risk) are recorded at fair value with an effect on income. As

of the reporting date, the fair value of instruments used as fair value

Commodity risks of the Group’s power generation companies belong-

hedges amounted to €10 million (previous year: €27 million).

ing to the Lignite & Nuclear and European Power segments are

transferred on the basis of available market liquidity – in accordance

In the year under review, a gain of €17 million (previous year:

with Group guidelines – at market prices to the Supply & Trading

€15 million) was recognised from adjustment of the carrying

segment, where they are hedged. In accordance with the approach

amounts of the underlying transactions with hedged risk, while

for long-term investments for example, it is not possible to manage

a loss of €17 million (previous year: €15 million) stemming from

commodity risks from long-term positions or positions which cannot

changes in the fair value of the hedges was recognised. Both of

be hedged due to their size and the prevailing market liquidity using

these are reported in the financial result.

the VaR concept. As a result, these positions are not included in the

VaR figures. Above and beyond open production positions which

Cash flow hedges are primarily used to hedge against foreign currency

have not yet been transferred, the Group companies belonging to the

and price risks from future sales, investment and purchase trans-

Lignite & Nuclear and European Power segments are not allowed to

actions. Hedging instruments consist of forwards and options with

maintain significant risk positions, according to a Group guideline.

foreign currency and interest rates, and forwards, futures and swaps

Commodity price risks in the innogy segment can exist in relation to

with commodities. Changes in the fair value of the hedging instru-

the renewable generation positions, in the gas storage business

ments – insofar as they affect the effective portion – are recorded

and in the retail business separate from fixed price products. As of

under other comprehensive income until the underlying transaction

31 December 2017, the aggregated commodity price risk for 2018

is realised. As a rule, the ineffective portion of changes in value is

in the innogy segment, which was calculated based on the as yet

recognised in profit or loss. Upon realisation of the underlying trans-

unhedged commodity risk positions of the divisions in the innogy

action, the hedge’s contribution to income from accumulated other

segment, was €20 million.

comprehensive income is recognised on the income statement. As

of the reporting date, the recognised fair value of instruments used

as cash flow hedges amounted to €478 million (previous year:
€622 million).

Consolidated financial statements > Notes

143

The future sales and purchase transactions hedged with cash flow

RWE and innogy review counterparty default risks before contracts

hedges are expected to be realised in the following five years and

are concluded. Both companies mitigate counterparty risks by defin-

recognised in profit or loss. The hedge of future capital expenditures

ing limits which are adjusted if necessary for reasons of creditwor-

concluded in a single case is expected to be realised in the following

thiness. The credit risk is constantly monitored across all divisions.

29 years and recognised in profit or loss.

RWE and innogy initiate countermeasures if necessary.

In the year under review, changes of €950 million after taxes in

RWE and innogy employ guarantees, cash collateral and other forms of

the fair values of instruments used for cash flow hedges (previous

security as well as credit insurance policies to protect against defaults.

year: €504 million) were disclosed under accumulated other

comprehensive income without an effect on income. These changes

The maximum balance-sheet default risk is derived from the carrying

in value reflect the effective portion of the hedges.

values of the receivables stated in the balance sheet. If default risks

materialise, they are recognised through impairments. The default

Income of €0 million was recognised with an effect on income in

risks for derivatives correspond to their positive fair values. Risks

relation to the ineffective portions of cash flow hedges (previous

can also stem from financial guarantees and loan commitments for

year: €11 million).

external creditors. As of 31 December 2017, these obligations

amounted to €161 million (previous year: €171 million). As of

Above and beyond this, during the reporting period changes of

31 December 2017, default risks were balanced against credit

€148 million after taxes in the value of cash flow hedges which
had originally been recognised without an effect on income were

collateral, financial guarantees, bank guarantees and other collater-
als amounting to €1.4 billion (previous year: €2.0 billion). Of this,

realised as income (previous year: expense of €504 million).

€0 billion relates to financial receivables (previous year: €0 billion),

€0.5 billion to trade receivables (previous year: €0.5 billion),

The cost of non-financial assets increased by €208 million (previous

€0.4 billion to derivatives used for hedging purposes (previous year:

year: €204 million), due to changes in the value of cash flow

€0.5 billion) and €0.5 billion to other derivatives (previous year:

hedges reported in other comprehensive income and not recognised

€1.0 billion). There were no material defaults in fiscal 2017 or the

in profit or loss.

previous year.

Hedges of net investment in a foreign operation are used to hedge

the foreign currency risks of net investment in foreign entities

Liquidity risks. As a rule, RWE Group companies refinance with
RWE AG or innogy SE, depending on which part of the Group they

whose functional currency is not the euro. We use bonds with various

belong to. In this regard, there is a risk that liquidity reserves will

terms in the appropriate currencies, interest rate currency swaps,

prove to be insufficient to meet financial obligations in a timely

and other currency derivatives as hedging instruments. If there are

manner. In 2018, bonds with a volume of approximately €1.0 billion

changes in the exchange rates of currencies in which the bonds

(previous year: €1.4 billion) and liabilities owed to banks of €0.3 billion

used for hedging are denominated or changes in the fair value of

(previous year: €0.1 billion) are due. Short-term debt must additionally

interest rate currency swaps, this is recorded under foreign cur-

be repaid.

rency translation adjustments in other comprehensive income. As

of the reporting date, the fair value of the bonds amounted to

As of 31 December 2017, holdings of cash and cash equivalents and

€3,693 million (previous year: €1,546 million) and the fair value

current marketable securities amounted to €8,826 million (previous

of the swaps and forwards (net asset position) amounted to

year: €14,401 million).

€325 million (previous year: €279 million).

During the year under review, expense of €16 million (previous year:

€2 billion syndicated credit line, which expires in October 2022. It

income of €21 million) was recognised on the income statement in

may be prolonged twice by a year at a time. Furthermore, the credit

relation to the ineffective portions of hedges of net investment in

line can be topped up by €1 billion. innogy SE cancelled its partici-

Since the beginning of October 2017, innogy SE has had its own

foreign operations.

Credit risks. In the fields of finance and commodities, RWE primarily
has credit relationships with banks and other trading partners.

pation in RWE AG’s existing €4 billion credit line by concluding the

new credit line. When innogy SE exited RWE AG’s credit line, it was

reduced to €3 billion in October 2017. It expires in March 2021. As

of the balance-sheet date, US$0.5 billion (previous year: US$0.5 billion)

innogy has such relationships primarily with banks and other business

of RWE AG’s US$5 billion commercial paper programme (previous year:

partners with good creditworthiness within the scope of large-scale

US$5 billion) was used.

projects such as the construction of wind farms.

144 RWE Annual Report 2017

As of 31 December 2017, innogy SE had a commercial paper pro-

€12.1 billion at innogy SE (previous year: €10.7 billion in total at

gramme with a volume of €3 billion, but this programme has not

RWE AG and innogy SE). Accordingly, the medium-term liquidity risk

yet been used. Above and beyond this, RWE and innogy can finance

can be classified as low for both RWE AG and innogy.

themselves using €10 billion and €20 billion debt issuance pro-

grammes, respectively; as of the balance-sheet date, outstanding

Financial liabilities falling under the scope of IFRS 7 are expected to

bonds from this programme amounted to €0 billion at RWE and

result in the following (undiscounted) payments in the coming years:

Redemption and interest payments on
financial liabilities

€ million

Bonds payable 1

Bank debt

Liabilities arising from finance lease agreements

Other financial liabilities

Derivative financial liabilities

Collateral for trading activities

Redemption liabilities from put options

Miscellaneous other financial liabilities

Carrying
amount
31 Dec 2017

13,049

1,594

248

1,464

4,257

389

1,451

5,601

Redemption payments

Interest payments

2018

2019
to 2022

From 2023

2018

2019
to 2022

From 2023

990

262

712

3,429

389

1,451

5,525

4,495

810

385

7,677

522

197

684

447

666

1,912

105

3,189

434

296

1 Including hybrid bonds classified as debt as per IFRS, taking into account the earliest possible call date.

Redemption and interest payments on
financial liabilities

€ million

Bonds payable 1

Bank debt

Liabilities arising from finance lease agreements

Other financial liabilities

Derivative financial liabilities

Collateral for trading activities

Redemption liabilities from put options

Miscellaneous other financial liabilities

Redemption payments

Interest payments

2017

2018
to 2021

From 2022

2017

2018
to 2021

From 2022

Carrying
amount
31 Dec 2016

13,719

1,421

1,670

252

1,441

5,703

569

1,488

6,064

129

630

4,953

569

1,488

6,007

5,972

819

333

6,360

723

201

746

417

774

2,313

108

145

3,656

445

340

1 Including hybrid bonds classified as debt as per IFRS, taking into account the earliest possible call date.

Above and beyond this, as of 31 December 2017, there were finan-

cial guarantees for external creditors in the amount of €90 million

(28) Contingent liabilities and financial commitments
As of 31 December 2017, the amount of capital commitments totalled

(previous year: €104 million), which are to be allocated to the first

€489 million (previous year: €384 million). This mainly consisted

year of repayment. Additionally, Group companies have provided

of investment in property, plant and equipment. There were also

loan commitments to third-party companies amounting to €71 million

unrecognised obligations to provide loans or other financial means

(previous year: €67 million), which is callable in 2018.

to joint ventures, which amounted to €10 million (previous year:

Detailed information on the risks of the RWE Group and on the

€26 million).

objectives and procedures of the risk management is presented on

Commitments from operating leases refer largely to rental arrange-

page 74 et seqq. in the review of operations.

ments for power generation and supply plants as well as rent and

Consolidated financial statements > Notes

145

lease contracts for storage and administration buildings. Minimum

lease payments have the following maturity structure:

(29) Segment reporting
RWE is divided into four (previous year: three) segments, which are

separated from each other based on functional criteria.

Operating leases

€ million

Due within 1 year

Due after 1 to 5 years

Due after 5 years

Nominal value

31 Dec 2017

31 Dec 2016

With effect from 1 January 2017, the former Conventional Power

265

685

1,261

2,211

243

665

1,142

2,050

Generation segment was divided into the two new Lignite & Nuclear

and European Power segments. In order to ensure the comparability

of the figures for fiscal 2017 with those of the previous years, we

have adjusted the latter to reflect the new structure. Furthermore,

we have renamed the Trading/Gas Midstream segment Supply &

Trading. This is purely a name change and has not changed the

We have made long-term contractual purchase commitments for

nature of the business conducted in the segment.

supplies of fuels, including natural gas in particular. Payment

obligations stemming from the major long-term purchase contracts

German electricity generation from lignite and nuclear fuel is sub-

amounted to €26.2 billion as of 31 December 2017 (previous year:

sumed in the Lignite & Nuclear segment. This includes the Rhenish

€26.0 billion), of which €1.3 billion is due within one year (previous

opencast lignite mining operations.

year: €1.7 billion).

Gas purchases by the RWE Group are partially based on long-term

The European Power segment encompasses the German, British,
Dutch/Belgian and Turkish power generation business via gas and

take-or-pay contracts. The conditions in these contracts, which have

hard coal-fired power stations, the Scottish biomass-fired power

terms up to 2036 in some cases, are renegotiated by the contractual

plant Markinch, and the project management and engineering special-

partners at certain intervals, which may result in changes in the

ist RWE Technology International. The segment is supplemented by

reported payment obligations. Calculation of the payment obligations

several hydroelectric power stations in Germany and Luxembourg.

resulting from the purchase contracts is based on parameters from

the internal planning.

The Supply & Trading segment contains energy and commodities

trading, the marketing and hedging of the RWE Group’s electricity

Furthermore, RWE has long-term financial commitments for purchas-

position and the gas midstream business. This segment is the

es of electricity. As of 31 December 2017, the minimum payment

responsibility of RWE Supply & Trading, which also supplies certain

obligations stemming from the major purchase contracts totalled

major industrial and commercial customers with electricity and

€7.1 billion (previous year: €7.4 billion), of which €0.6 billion is due

natural gas.

within one year (previous year: €0.4 billion). Above and beyond this,

there are also long-term purchase and service contracts for uranium,

The innogy segment essentially covers business in renewables, grids

conversion, enrichment and fabrication.

and supply. Along with electricity generation, activities in the field

of renewables include the development and implementation of pro-

We bear legal and contractual liability from our membership in various

jects to expand capacities. Wind and hydro electric power are the

associations which exist in connection with power plant projects,

two dominant production technologies. The main production sites

profit- and loss-pooling agreements and for the provision of liability

are located in Germany, the United Kingdom, the Netherlands,

cover for nuclear risks, amongst others.

Poland, Spain and Italy. The second main area of innogy’s business

is the operation of distribution networks in Germany, the Czech

On the basis of a mutual benefit agreement, RWE AG and other parent

Republic, and in Slovakia, Hungary and Poland. The third pillar of

companies of German nuclear power plant operators undertook to

innogy’s business is the supply of electricity, gas and energy solu-

provide approximately €2,244 million in funding to liable nuclear

tions in Germany, the Netherlands, Belgium, the United Kingdom,

power plant operators to ensure that they are able to meet their

the Czech Republic, Slovakia, Hungary, Poland and a few other

payment obligations in the event of nuclear damages. From 1 Jan-

Central Eastern European countries. The innogy segment also includes

uary 2018, onwards, RWE AG has a 21.347 % contractual share in

holding activities, internal service providers and consolidation

the liability, plus 5 % for damage settlement costs.

effects of innogy SE.

RWE AG and its subsidiaries are involved in official, regulatory and

‘Other, consolidation’ covers consolidation effects, RWE AG and

anti-trust proceedings, litigation and arbitration proceedings related

the activities of other business areas which are not presented

to their operations and are affected by the results of such. In some

separately. These activities primarily include our non-controlling

cases, out-of-court claims are also filed. However, RWE does not expect

interest in the German transmission system operator Amprion.

any material negative repercussions from these proceedings on the

RWE Group’s economic or financial position.

146 RWE Annual Report 2017

Segment reporting
Divisions 2017
€ million

External revenue
(incl. natural gas tax/electricity tax)

Intra-group revenue

Total revenue

Adjusted EBIT

Operating income from investments

Operating income from investments accounted
for using the equity method

Operating depreciation, amortisation and impairment
losses

Impairment losses

Adjusted EBITDA

Carrying amount of investments accounted
for using the equity method

Capital expenditure on intangible assets, property,
plant and equipment and investment property

Lignite &
Nuclear

European
Power

Supply &
Trading

innogy

Other,
consolidation

RWE Group

1,176

2,993

4,169

399

272

311

671

269

728

4,165

4,893 ²

155

− 2

308

463

105

147

3,189

13,634

16,823

265

− 16

271

39,475

2,591

42,066

2,816

289

197

1,515

540

4,331

2,214

1,839

44,585

− 23,383¹

− 23,366

460

− 2

44,585

3,646

380

302

2,110

925

5,756

2,846

2,260

1 Of which: consolidation of intra-group revenue – €23.383 million and intra-group revenue of other companies €0 million.
2 Of which: total revenue from power generation in the United Kingdom of €2.166 million.

Regions 2017

€ million

External revenue 1, 2

Germany

26,288

7,419

Other EU

7,902

Rest of
Europe

311

Intangible assets, property, plant and
equipment and investment property

18,660

6,930

11,418

Other

RWE Group

514

322

42,434

37,330

1 Excluding natural gas tax/electricity tax.
2 Broken down by the region in which the service was provided.

Segment reporting
Divisions 2016
€ million

External revenue
(incl. natural gas tax/electricity tax)

Intra-group revenue

Total revenue

Adjusted EBIT

Operating income from investments

Operating income from investments accounted
for using the equity method

Operating depreciation, amortisation and impairment
losses

Impairment losses

Adjusted EBITDA

Carrying amount of investments accounted
for using the equity method

Capital expenditure on intangible assets, property,
plant and equipment and investment property

Lignite &
Nuclear

European
Power

Supply &
Trading

innogy

Other,
consolidation

RWE Group

1,193

3,489

4,682

664

415

2,780

1,079

267

774

4,732

5,506 ²

− 37

414

1,288

377

130

3,646

15,734

19,380

− 145

− 22

− 139

40,149

1,811

41,960

2,735

368

276

1,468

327

4,203

2,256

1,679

45,833

− 25,766 ¹

− 25,695

− 135

− 117

459

45,833

3,082

464

387

2,321

4,415

5,403

2,908

2,027

1 Of which: consolidation of intra-group revenue – €27,982 million and intra-group revenue of other companies €2,216 million.
2 Of which: total revenue from power generation in the United Kingdom of €2.820 million.

Consolidated financial statements > Notes

147

Regions 2016

€ million

External revenue 1, 2

Germany

24,990

9,196

Other EU

8,437

Rest of
Europe

589

Intangible assets, property, plant and
equipment and investment property

17,928

7,573

11,454

Other

RWE Group

378

312

43,590

37,267

1 Excluding natural gas tax/electricity tax.
2 Broken down by the region in which the service was provided.

Products

€ million

External revenue 1

of which: electricity

of which: gas

1 Excluding natural gas tax/electricity tax.

RWE Group

2017

42,434

30,568

8,971

2016

43,590

31,420

9,208

Notes on segment data. We report revenue between the segments
as RWE intra-group revenue. Internal supply of goods and services is

settled at arm’s length conditions. Adjusted EBITDA is used for inter-

nal management. The following table presents the reconciliation of

adjusted EBITDA to adjusted EBIT and income before tax:

Reconciliation of income items
€ million

Adjusted EBITDA

– Operating depreciation, amortisation and impairment losses

Adjusted EBIT

+ Non-operating result

+ Financial result

Income before tax

2017

2016

5,756

5,403

− 2,110

− 2,321

3,646

161

− 751

3,056

3,082

− 6,661

− 2,228

− 5,807

Income and expenses that are unusual from an economic perspective,

the disposal of investments or non-current assets not required for

or stem from exceptional events, prejudice the assessment of

operations, impairment of the goodwill of fully consolidated compa-

operating activities. They are reclassified to the non-operating result.

nies, as well as effects of the fair valuation of certain derivatives.

Amongst other things, these can include book gains or losses from

Non-operating result
€ million
Capital gains/losses

Impact of derivatives on earnings

Goodwill amortisation

Other

Non-operating result

More detailed information is presented on page 47.

2017

2016

118

− 719

− 479

1,241

161

− 799

− 5,956

− 6,661

148 RWE Annual Report 2017

(30) Notes to the cash flow statement
The cash flow statement classifies cash flows according to operating,

Flows of funds from the acquisition and sale of consolidated

companies are included in cash flows from investing activities.

investing and financing activities. Cash and cash equivalents in the

Effects of foreign exchange rate changes and other changes in

cash flow statement correspond to the amount stated in the balance

value are stated separately.

sheet. Cash and cash equivalents consist of cash on hand, demand

deposits and fixed-interest marketable securities with a maturity of

Cash flows from financing activities include €5 million (previous

three months or less from the date of acquisition.

year: €5 million) which was distributed to RWE shareholders,

Among other things, cash flows from operating activities include:

to non-controlling shareholders, and €60 million (previous year:

€538 million (previous year: €335 million) which was distributed

€67 million) which was distributed to hybrid capital investors.

• cash flows from interest income of €188 million (previous year:

Furthermore, cash flows from financing activities include purchas-

€295 million) and cash flows used for interest expenses of

es of €19 million (previous year: €2 million) and sales in the

€950 million (previous year: €904 million)

amount of €0 million (previous year: €2,591 million) of shares in

• €908 million (previous year: €627 million) in taxes on income paid

subsidiaries and other business units which did not lead to a

(less refunds)

change of control.

•

income from investments, corrected for items without an effect

on cash flows, in particular from accounting using the equity

Changes in liabilities from financing activities are presented in the

method, amounted to €349 million (previous year: €333 million)

following table:

Statement of changes in
financial liabilities

1 Jan 2017

Inrease/repay-
ment accord-
ing to the cash
flow statement

Changes in the
scope of con-
solidation

Currency
effects

Changes in
fair values

Other
changes

31 Dec 2017

€ million
Current financial liabilities

Non-current financial
liabilities

Other items

2,142

16,041

– 209

– 322

− 338

− 39

− 13

175

− 144

862

2,787

− 377

– 915

14, 414

The amount stated in the ‘Other items’ line item contains cash-effective

Water concession agreements contain rules for the right and obli-

changes resulting from derivative financial instruments and margin

gation to provide water and wastewater services, operate the asso-

payments, which are recognised in cash flows from financing activities

ciated infrastructure, such as water utility plants, as well as to

in the cash flow statement.

implement capital expenditure. Concessions in the water business

generally have terms of up to 25 years.

Restrictions on the disposal of cash and cash equivalents amounted

to €38 million (previous year: €19 million).

(31) Information on concessions
In the fields of electricity, gas and water supply, there are a number

(32) Related party disclosures
Within the framework of their ordinary business activities, RWE AG

and its subsidiaries have business relationships with numerous

companies. These include associated companies and joint ventures,

of easement agreements and concession contracts between RWE Group

which are classified as related parties. In particular, this category

companies and the governmental authorities in the areas we supply.

includes material investments of the RWE Group which are accounted

for using the equity method.

Easement agreements are used in the electricity and gas business

to regulate the use of public rights of way for laying and operating

lines for public energy supply. These agreements are generally limited

to a term of 20 years. After expiry, there is a legal obligation to

transfer ownership of the local distribution facilities to the new

operator, for appropriate compensation.

Consolidated financial statements > Notes

149

Business transactions were concluded with major associates and

joint ventures, resulting in the following items in RWE’s consolidated

financial statements:

Key items from transactions with associates
and joint ventures
€ million

Income

Expenses

Receivables

Liabilities

Associated companies

Joint ventures

2017

3,553

2,992

247

168

2016

3,661

3,001

329

147

2017

145

2016

148

182

The key items from transactions with associates and joint ventures

In total, the compensation of the Executive Board amounted to

mainly stem from supply and service transactions. In addition to

€7,274,000 (previous year: €15,486,000). This contains share-based

supply and service transactions, there are also financial links with

payments amounting to €2,567,000 (192,556 RWE and 10,264

joint ventures. During the reporting period, income of €7 million
(previous year: €4 million) was recorded from interest-bearing loans

innogy performance shares) granted within the framework of the
LTIP SPP. In the previous year, share-based payments amounting to

to joint ventures. As of the balance-sheet date, financial receivables

€2,987,000 (73,702 RWE and 53,107 innogy performance shares)

accounted for €142 million of the receivables from joint ventures

were granted.

(previous year: €177 million). All transactions were completed at

arm’s length conditions, i.e. on principle the conditions of these

Including compensation from subsidiaries for the exercise of mandates,

transactions did not differ from those with other enterprises.

the Supervisory Board received total compensation of €3,637,000

€285 million of the receivables (previous year: €371 million) and

(previous year: €3,228,000) in fiscal 2017. The employee representa-

€139 million of the liabilities (previous year: €107 million) fall

tives on the Supervisory Board have labour contracts with the

due within one year. Other obligations from executory contracts

respective Group companies. Remuneration occurs in accordance

amounted to €1,426 million (previous year: €1,203 million).

with the relevant contractual conditions.

Above and beyond this, the RWE Group did not execute any material

During the period under review, no loans or advances were granted

transactions with related companies or persons.

to members of the Executive or Supervisory Boards.

With regard to fiscal 2017, in addition to the members of the Execu-

Former members of the Executive Board and their surviving

tive Board and Supervisory Board of RWE AG, the Executive Board

dependants received €10,699,000 (previous year: €11,653,000),

members and Supervisory Board members of innogy SE are deemed

of which €918,000 came from subsidiaries (previous year:

to be key management personnel for the RWE Group. The following

€1,305,000). As of the balance-sheet date, €146,430,000 (previous

infor mation pertains to total compensation pursuant to IAS 24.

year: €159,950,000) were accrued for defined benefit obligations

Key management personnel (Executive and Supervisory Board

dependants. Of this, €8,601,000 was set aside at subsidiaries

to former members of the Executive Board and their surviving

members) received €22,121,000 in short-term compensation com-

( previous year: €14,808,000).

ponents for fiscal 2017 (previous year: €13,832,000). Additionally,

share-based payments within the framework of LTIP SPP amounted to

Information on the members of the Executive and Supervisory

€3,183,000 (previous year: €1,131,000) and their pension service

Boards is presented on page 185 et seqq. of the Notes.

costs amounted to €538,000 (previous year: €229,000). Provisions

totalling €32,624,000 (previous year: €23,775,000) were formed

for obligations vis-à-vis key management personnel.

The compensation model and compensation of the Executive and

Supervisory Boards of RWE AG calculated pursuant to the German

Commercial Code is presented in the compensation report, which

is included in the review of operations.

150 RWE Annual Report 2017

(33) Auditor’s fees
The fees for audit services primarily contain the fees for the audit

national tax-related matters as well as review of resolutions of the

tax authorities. Other services primarily include compensation for

of the consolidated financial statements and for the audit of the

IT project consulting. The higher fees in the previous year were

financial statements of RWE AG and its subsidiaries, along with

mainly related to the IPO of innogy SE. An expense of €5 million was

the review of the interim statements. In the previous year, fees for

recognised for this.

the review of the combined financial statements prepared for the

IPO of innogy SE are also included here. Other assurance services

RWE recognised the following fees as expenses for the services ren-

include fees for review of the internal controlling system, as well

dered by the auditors of the consolidated financial statements,

as expenses related to statutory or court-ordered requirements. In

PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft

particular, the fees for tax services include compensation for consul-

(PwC) and companies belonging to PwC’s international network:

tation in the preparation of tax returns and other national and inter-

PwC network fees

€ million

Audit services

Other assurance services

Tax services

Other services

2017

2016

Total

17.5

3.4

0.3

3.2

24.4

Of which:
Germany

10.9

3.2

0.3

0.8

15.2

Total

19.5

5.0

0.4

2.6

27.5

Of which:
Germany

12.4

4.6

0.3

2.6

19.9

(34) Application of Sec. 264, Para. 3 and Sec. 264b of the

German Commercial Code

(35) Events after the balance-sheet date
In the period from 1 January 2018 until the completion of the con-

In fiscal 2017, the following German subsidiaries made partial use of

solidated financial statements on 26 February 2018, the following

the exemption clause included in Sec. 264, Para. 3 and Sec. 264b of

significant events occurred:

the German Commercial Code (HGB):

Placement of an innogy bond

• BGE Beteiligungs-Gesellschaft für Energieunternehmen mbH,

On 24 January 2018, innogy placed a bond with a volume of

Essen

€1 billion and a tenor of 11.5 years. The bond was issued by innogy

• GBV Dreißigste Gesellschaft für Beteiligungsverwaltung mbH,

Finance B.V. and backed by innogy SE. Based on a coupon of 1.5%

Essen

and an issue rate of 98.785%, the annual yield amounts to 1.617%.

• Kernkraftwerk Lingen Gesellschaft mit beschränkter Haftung,

Lingen (Ems)

Acquisition of Regionetz GmbH

• KMG Kernbrennstoff-Management Gesellschaft mit beschränkter

In early January 2018, based on a contractual agreement innogy

Haftung, Essen

obtained control over the ‘Grids‘ division of Stadtwerke Aachen AG

• Rheinbraun Brennstoff GmbH, Cologne

(STAWAG) and will include this in its consolidated financial state-

• Rheinische Baustoffwerke GmbH, Bergheim

ments from the first quarter of 2018 onwards.

• RV Rheinbraun Handel und Dienstleistungen GmbH, Cologne

• RWE Downstream Beteiligungs GmbH, Essen

• RWE Rheinhessen Beteiligungs GmbH, Essen

• RWE Technology International GmbH, Essen

• RWE Trading Services GmbH, Essen

Consolidated financial statements > Notes

151

Additionally, an agreement was reached to fold regionetz GmbH,

The portion of the enterprise value of the former regionetz GmbH

a 100 % shareholding of innogy and thus a fully consolidated

corresponding to STAWAG’s prorated capital share in the future

company of the RWE Group, into Regionetz GmbH, Aachen

Regionetz GmbH is taken as the basis for the cost of the company

(‘INFRAWEST GmbH’ prior to renaming), with retroactive commercial

acquired by innogy. Any positive difference between this amount

effective to 1 January 2018. As consideration for granting a majority

and the RWE Group’s share of net assets in the former STAWAG

share in regionetz GmbH, innogy will obtain a minority interest of

‘Grids‘ division is recognised as goodwill; any negative difference

the shares in Regionetz GmbH, 100 % of which were previously held

would be reported as income.

by STAWAG. According to the contractual agreement, innogy will

have a controlling position in accordance with IFRS 10 and will thus

The effects of the initial recognition of the business combination

fully consolidate Regionetz GmbH, in which it will hold a capital

have not yet been determined definitively due to the complex struc-

share of less than 50 %.

ture of the transaction.

The company will essentially operate electricity, gas, heat and water

When the consolidated financial statements of the RWE Group were

distribution networks for the City of Aachen, Greater Aachen and

prepared, the assets and liabilities assumed as part of the merger

parts of the Districts of Heinsberg and Düren. Its assets and liabili-

of INFRAWEST GmbH had not yet been determined definitively.

ties will comprise the operation of the merging regionetz GmbH

Consequently, it is not possible to present the information on the

as a contribution by innogy and the ‘Grids’ division that is to be

fair values of the assets assumed, including assumed receivables

carved out of STAWAG and has been contractually controlled by
innogy since the beginning of 2018 as a contribution by STAWAG.

and liabilities, or the information on the factors which may comprise
goodwill, or any necessary information on an acquisition at a price

below market value.

In the RWE Group, this merger, which is to occur in several steps,

will be reported as the acquisition of the former STAWAG ‘Grids‘ divi-

sion at the start of 2018. The accounting treatment of the assets

and liabilities of the merging regionetz GmbH in the RWE Group is

not affected by the transaction.

The assets and liabilities of the acquired company (former STAWAG

‘Grids’ division) will be recognised at fair value in RWE’s consolidated

financial statements. After completion of the transaction, non-con-

trolling interests will be reported within equity, in the amount of the

capital share in Regionetz GmbH allocable to STAWAG. As part of

this combination, an equity capital transaction thus occurs, within

the framework of which a third party also obtains – via its capital

share in the merged company – a corresponding share in the opera-

tions of the former regionetz GmbH, which was previously fully con-

trolled by innogy and has now been folded into the merged company.

152 RWE Annual Report 2017

(36) Declaration according to Sec. 161 of the German Stock

Corporation Act

The declarations on the German Corporate Governance Code

prescribed by Sec. 161 of the German Stock Corporation Act (AktG)

have been submitted for RWE AG and innogy SE and have been

made permanently and publicly available to shareholders on the
Internet pages of RWE AG1 and innogy SE 2.

Essen, 26 February 2018

The Executive Board

Schmitz

Krebber

1 www.rwe.com/statement-of-compliance-2017
2 www.innogy.com/statement-of-compliance-2017

Consolidated financial statements > List of shareholdings (part of the notes)

153

3.7 LIST OF SHAREHOLDINGS (PART OF THE NOTES)

List of shareholdings as per Sec. 285 No. 11 and No. 11a and Sec. 313 Para. 2 (in relation to Sec. 315 e I) of HGB as of 31 December 2017

Shareholding in %

Equity

Net income/loss

Direct

I. Affiliated companies which are included in the

consolidated financial statements

Aktivabedrijf Wind Nederland B.V., Zwolle/Netherlands

An Suidhe Wind Farm Limited, Swindon/United Kingdom

Andromeda Wind S.r.l., Bolzano/Italy

Artelis S.A., Luxembourg/Luxembourg

A/V/E GmbH, Halle (Saale)

Bayerische Bergbahnen-Beteiligungs-Gesellschaft mbH, Gundremmingen

Bayerische Elektrizitätswerke GmbH, Augsburg

Bayerische-Schwäbische Wasserkraftwerke Beteiligungsgesellschaft mbH,
Gundremmingen

Belectric Solar & Battery - Group - (pre-consolidated)

Belectric France S.à.r.l., Vendres/France

Belectric GmbH, Kolitzheim

Belectric Israel Ltd., Be’er Scheva/Israel

Belectric Italia S.R.L., Latina/Italy

Belectric Photovoltaic India Private Limited, Mumbai/India

Belectric PV Dach GmbH, Kolitzheim

Belectric Solar & Battery GmbH, Kolitzheim

Belectric Solar Ltd., Iver/United Kingdom

hoch.rein Beteiligungen GmbH, Kolitzheim

Jurchen Technology GmbH, Helmstadt

Jurchen Technology India Private Limited, Mumbai/India

ka-tek GmbH, Kolitzheim

Padcon GmbH, Kitzingen

Solar Holding Poland GmbH, Kolitzheim

BGE Beteiligungs-Gesellschaft für Energieunternehmen mbH, Essen

100

Bilbster Wind Farm Limited, Swindon/United Kingdom

Bristol Channel Zone Limited, Swindon/United Kingdom

BTB-Blockheizkraftwerks, Träger- und Betreibergesellschaft mbH Berlin, Berlin

Budapesti Elektromos Muvek Nyrt., Budapest/Hungary

Carl Scholl GmbH, Cologne

Carnedd Wen Wind Farm Limited, Swindon/United Kingdom

Cegecom S.A., Luxembourg/Luxembourg

Channel Energy Limited, Swindon/United Kingdom

CR-Immobilien-Vermietungsgesellschaft mbH & Co. KG Cottbus, Cottbus

Dromadda Beg Wind Farm Limited, Tralee/Ireland

EGG Holding B.V. - Group - (pre-consolidated)

Bakker CV Installatietechniek B.V., Zwaagdijk/Netherlands

EGG Holding B.V., Meppel/Netherlands

Energiewacht Facilities B.V., Zwolle/Netherlands

Energiewacht Steenwijk B.V., Zwolle/Netherlands

Energiewacht VKI B.V., Dalfsen/Netherlands

Energiewacht-A.G.A.S.-Deventer B.V., Deventer/Netherlands

Energiewacht-Gazo B.V., Zwolle/Netherlands

€ '000

181,751

21,271

7,593

39,002

3,358

26,445

24,728

62,953

62,802

€ '000

– 30,270

– 171

2,078

2,928

1,289

1,014

8,288

– 10,7222

4,317,938

3,006

– 2,087

19,783

663,195

638

– 3,475

11,071

– 17,207

– 1,134

3,005

23,121

– 101

56,796

– 115

1,171

– 789

454

– 156

1,0422

Total

100

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

154 RWE Annual Report 2017

I. Affiliated companies which are included in the

consolidated financial statements

GasWacht Friesland B.V., Gorredijk/Netherlands

GasWacht Friesland Facilities B.V., Leeuwarden/Netherlands

N.V. Energiewacht-Groep, Zwolle/Netherlands

Sebukro B.V., Amersfoort/Netherlands

ELE Verteilnetz GmbH, Gelsenkirchen

Electra Insurance Limited, Hamilton/Bermuda

Elektrizitätswerk Landsberg GmbH, Landsberg am Lech

ELMU DSO Holding Korlátolt Felelosségu Társaság, Budapest/Hungary

ELMU Halozati Eloszto Kft., Budapest/Hungary

ELMU-ÉMÁSZ Energiakereskedo Kft., Budapest/Hungary

ELMU-ÉMÁSZ Energiaszolgáltató Zrt., Budapest/Hungary

ELMU-ÉMÁSZ Halozati Szolgáltató Kft., Budapest/Hungary

ELMU-ÉMÁSZ Ügyfélszolgálati Kft., Budapest/Hungary

ÉMÁSZ DSO Holding Korlátolt Felelosségu Társaság, Miskolc/Hungary

ÉMÁSZ Halozati Kft., Miskolc/Hungary

Emscher Lippe Energie GmbH, Gelsenkirchen

Energiedirect B.V., Waalre/Netherlands

Energienetze Berlin GmbH, Berlin

Energies France S.A.S. - Group - (pre-consolidated)

Centrale Hydroelectrique d'Oussiat S.A.S., Paris/France

Energies Charentus S.A.S., Paris/France

Energies France S.A.S., Paris/France

Energies Maintenance S.A.S., Paris/France

Energies Saint Remy S.A.S., Paris/France

Energies VAR 1 S.A.S., Paris/France

Energies VAR 3 S.A.S., Paris/France

SAS Île de France S.A.S., Paris/France

Energiewacht N.V. - Group - (pre-consolidated)

EGD-Energiewacht Facilities B.V., Assen/Netherlands

Energiewacht installatie B.V., Assen/Netherlands

Energiewacht N.V., Veendam/Netherlands

Energiewacht West Nederland B.V., Assen/Netherlands

energis GmbH, Saarbrücken

energis-Netzgesellschaft mbH, Saarbrücken

Energy Resources B.V., 's-Hertogenbosch/Netherlands

Energy Resources Holding B.V., 's-Hertogenbosch/Netherlands

Energy Resources Ventures B.V., 's-Hertogenbosch/Netherlands

envia Mitteldeutsche Energie AG, Chemnitz

envia SERVICE GmbH, Cottbus

envia TEL GmbH, Markkleeberg

envia THERM GmbH, Bitterfeld-Wolfen

enviaM Beteiligungsgesellschaft Chemnitz GmbH, Chemnitz

enviaM Beteiligungsgesellschaft mbH, Essen

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

100

883

31,327

1,447

714,231

768,337

6,888

6,076

102

739

272,100

281,341

56,917

– 52,980

31,131

1,045

432

– 6

33,850

5,456

731

– 6

9,270

36,492

– 1,100

– 1622

39,434

2,9822

136,964

27,002

140,154

44,326

24,421

22,750

2,529

53,963

236

1,709,000

203,052

3,316

18,998

63,463

56,366

1,362

3,004

175,723

31,707

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

155

Shareholding in %

Equity

Net income/loss

Direct

Total

I. Affiliated companies which are included in the

consolidated financial statements

eprimo GmbH, Neu-Isenburg

Essent Belgium N.V., Antwerp/Belgium

Essent CNG Cleandrive B.V., 's-Hertogenbosch/Netherlands

Essent Energie Verkoop Nederland B.V., 's-Hertogenbosch/Netherlands

Essent EnergieBewust Holding B.V., 's-Hertogenbosch/Netherlands

Essent Energy Group B.V., Arnhem/Netherlands

Essent IT B.V., Arnhem/Netherlands

Essent Nederland B.V., Arnhem/Netherlands

Essent N.V., 's-Hertogenbosch/Netherlands

Essent Power B.V., Arnhem/Netherlands

Essent Retail Energie B.V., 's-Hertogenbosch/Netherlands

Essent Sales Portfolio Management B.V., 's-Hertogenbosch/Netherlands

Essent Wind Nordsee Ost Planungs- und Betriebsgesellschaft mbH, Helgoland

Eszak-magyarorszagi Aramszolgáltató Nyrt., Miskolc/Hungary

EuroSkyPark GmbH, Saarbrücken

EVIP GmbH, Bitterfeld-Wolfen

EWV Energie- und Wasser-Versorgung GmbH, Stolberg

FAMIS Gesellschaft für Facility Management und Industrieservice mbH,
Saarbrücken

Fri-El Anzi Holding S.r.l., Bolzano/Italy

Fri-El Anzi S.r.l., Bolzano/Italy

Fri-El Guardionara Holding S.r.l., Bolzano/Italy

Fri-El Guardionara S.r.l., Bolzano/Italy

GasNet, s.r.o., Ústí nad Labem/Czech Republic

GBV Dreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

Geas Energiewacht B.V., Enschede/Netherlands

Gemeinschaftskraftwerk Bergkamen A beschränkt haftende OHG, Bergkamen

Georgia Biomass Holding LLC, Savannah/USA

Georgia Biomass LLC, Savannah/USA

GfV Gesellschaft für Vermögensverwaltung mbH, Dortmund

100

Great Yarmouth Power Limited, Swindon/United Kingdom

Green Gecco GmbH & Co. KG, Essen

GridServices, s.r.o., Brno/Czech Republic

GWG Grevenbroich GmbH, Grevenbroich

Harryburn Wind Farm Limited, Swindon/United Kingdom

Hof Promotion B.V., Eindhoven/Netherlands

Immobilien-Vermietungsgesellschaft Schumacher GmbH & Co. Objekt
Kundenzentren KG, Düsseldorf

innogy Aqua GmbH, Mülheim an der Ruhr

innogy Benelux Holding B.V., 's-Hertogenbosch/Netherlands

innogy Bergheim Windparkbetriebsgesellschaft mbH, Hanover

innogy Beteiligungsholding GmbH, Essen

innogy Brise Windparkbetriebsgesellschaft mbH, Hanover

€ '000

4,600

94,680

– 12

€ '000

6,633

– 12

102,820

– 25,400

– 4

– 534

– 266,782

– 4

– 106

– 3,357

715,800

– 3,986,800

7,737,300

691,420

272,828

256

299,368

558

11,347

49,347

4,180

7,310

6,631

10,721

10,304

901,564

13,889

6,277

56,342

38,248

103,680

96,827

35,261

23,648

– 1,426

– 66

– 115

233,106

87,300

43,772

144,800

700,384

15,517

282

13,570

1,326

– 31

1,472

1,379

2,502

177,959

1,633

594

1,055

17,163

92,908

5,001

30,234

4,250

– 1,445

– 135

949

2,990,200

2,269,100

3,895,026

226

– 1

100

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

156 RWE Annual Report 2017

I. Affiliated companies which are included in the

consolidated financial statements

innogy Business Services Benelux B.V., Arnhem/Netherlands

innogy Business Services Polska Sp. z o.o., Krakow/Poland

Innogy Business Services UK Limited, Swindon/United Kingdom

innogy Ceská republika a.s., Prague/Czech Republic

innogy Company Building GmbH, Berlin

innogy Energetyka Trzemeszno Sp. z o.o., Wroclaw/Poland

innogy Energie, s.r.o., Prague/Czech Republic

innogy Energo, s.r.o., Prague/Czech Republic

innogy Evendorf Windparkbetriebsgesellschaft mbH, Hanover

innogy Finance B.V., 's-Hertogenbosch/Netherlands

innogy Gas Storage NWE GmbH, Dortmund

innogy Gas Storage, s.r.o., Prague/Czech Republic

innogy Gastronomie GmbH, Essen

innogy Grid Holding, a.s., Prague/Czech Republic

Innogy Gym 2 Limited, Swindon/United Kingdom

Innogy Gym 3 Limited, Swindon/United Kingdom

Innogy Gym 4 Limited, Swindon/United Kingdom

innogy Hörup Windparkbetriebsgesellschaft mbH, Hanover

innogy Hungária Tanácsadó Kft., Budapest/Hungary

innogy indeland Windpark Eschweiler GmbH & Co. KG, Eschweiler

innogy Innovation GmbH, Essen

innogy International Participations N.V., 's-Hertogenbosch/Netherlands

innogy IT Magyarország Kft., Budapest/Hungary

innogy Italia S.p.A., Milan/Italy

innogy Kaskasi GmbH, Hamburg

innogy Lengerich Windparkbetriebsgesellschaft mbH, Gersten

innogy Lüneburger Heide Windparkbetriebsgesellschaft mbH, Walsrode

innogy Metering GmbH, Mülheim an der Ruhr

innogy Mistral Windparkbetriebsgesellschaft mbH, Hanover

innogy Netze Deutschland GmbH, Essen

innogy New Ventures LLC, Palo Alto/USA

innogy Offshore Wind Netherlands B.V., 's-Hertogenbosch/Netherlands

innogy Polska Contracting Sp. z o.o., Wroclaw/Poland

innogy Polska S.A., Warsaw/Poland

innogy Renewables Benelux B.V., 's-Hertogenbosch/Netherlands

innogy Renewables Beteiligungs GmbH, Dortmund

Innogy Renewables Ireland Limited, Dublin/Ireland

innogy Renewables Polska Sp. z o.o., Warsaw/Poland

Innogy Renewables UK Holdings Limited, Swindon/United Kingdom

Innogy Renewables UK Limited, Swindon/United Kingdom

Innogy Renewables US LLC, Delaware/USA

innogy SE, Essen

innogy Seabreeze II GmbH & Co. KG, Essen

Shareholding in %

Equity

Net income/loss

Direct

Total

100

€ '000

– 1,992

5,310

20,289

2,139,381

1,868

1,974

204,051

19,988

10,907

350,087

539,594

275

1,143,966

– 11,240

– 11,239

– 33,715

2,457

60,722

130,038

9,380,116

1,159

12,198

578

497,854

34,703

– 2,527

5,722

424,028

– 17,936

7,350

– 811

208,516

1,939,665

1,524,877

52,032

8,926,111

13,386

€ '000

3,951

1,259

– 13,350

209,039

– 657

235

123,410

742

1,546

12,496

150,629

– 6,265

– 6,266

– 18,804

– 56

1,761

438,700

6,770

– 7,113

384

100,446

– 3,253

– 807

– 82,713

314,574

142,590

– 614

907,605

– 19,149

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

157

I. Affiliated companies which are included in the

consolidated financial statements

innogy Slovensko s.r.o., Bratislava/Slovakia

Innogy Solutions Ireland Limited, Dublin/Ireland

innogy solutions Kft., Budapest/Hungary

innogy Solutions s.r.o., Banská Bystrica/Slovakia

innogy Sommerland Windparkbetriebsgesellschaft mbH, Hanover

innogy South East Europe s.r.o., Bratislava/Slovakia

innogy Spain, S.A.U.- Group - (pre-consolidated)

Danta de Energías, S.A., Soria/Spain

Explotaciones Eólicas de Aldehuelas, S.L., Soria/Spain

General de Mantenimiento 21, S.L.U., Barcelona/Spain

Hidroeléctrica del Trasvase, S.A., Barcelona/Spain

innogy Spain, S.A.U., Barcelona/Spain

Innogy Stallingborough Limited, Swindon/United Kingdom

innogy Stoen Operator Sp. z o.o., Warsaw/Poland

innogy Süderdeich Windparkbetriebsgesellschaft mbH, Süderdeich

innogy TelNet GmbH, Essen

innogy Titz Windparkbetriebsgesellschaft mbH, Essen

innogy Wind Onshore Deutschland GmbH, Hanover

innogy Windpark Bedburg GmbH & Co. KG, Bedburg

innogy Windpower Netherlands B.V., 's-Hertogenbosch/Netherlands

innogy Zákaznické služby, s.r.o., Ostrava/Czech Republic

innogy Zweite Vermögensverwaltungs GmbH, Essen

INVESTERG - Investimentos em Energias, SGPS, Lda. - Group - (pre-consolidated)

INVESTERG - Investimentos em Energias, Sociedade Gestora de Participações
Sociais, Lda., São João do Estoril/Portugal

LUSITERG - Gestão e Produção Energética, Lda., São João do Estoril/Portugal

Isoprofs B.V., Meijel/Netherlands

iSWITCH GmbH, Essen

It's a beautiful world B.V., Amersfoort/Netherlands

Kernkraftwerk Gundremmingen GmbH, Gundremmingen

Kernkraftwerk Lingen Gesellschaft mit beschränkter Haftung, Lingen (Ems)

Kernkraftwerke Lippe-Ems Gesellschaft mit beschränkter Haftung, Lingen (Ems)

KMG Kernbrennstoff-Management Gesellschaft mit beschränkter Haftung, Essen

Knabs Ridge Wind Farm Limited, Swindon/United Kingdom

Koprivnica Opskrba d.o.o., Koprivnica/Croatia

Koprivnica Plin d.o.o., Koprivnica/Croatia

Kraftwerksbeteiligungs-OHG der RWE Power AG und der PreussenElektra GmbH,
Lingen/Ems

Krzecin Sp. z o.o., Warsaw/Poland

Lechwerke AG, Augsburg

Leitungspartner GmbH, Düren

LEW Anlagenverwaltung Gesellschaft mit beschränkter Haftung, Gundremmingen

LEW Beteiligungsgesellschaft mbH, Gundremmingen

Shareholding in %

Equity

Net income/loss

Direct

Total

100

€ '000

8,240

4,771

1,952

1,177

1,058

€ '000

7,841

823

– 51

147

– 54

131,098

– 2,7952

– 8,334

676,069

106

77,373

93,613

– 36,246

1,572

350,026

16,907

– 28

4,691

92,527

20,034

432,269

696,225

8,901

285

8,786

144,433

12,763

522,812

100

290,715

471,290

– 181

45,951

6,172

1,109

6102

– 155

1,262

8,343

426

– 66

– 4,583

123,149

8,644

14,983

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

158 RWE Annual Report 2017

I. Affiliated companies which are included in the

consolidated financial statements

LEW Netzservice GmbH, Augsburg

LEW Service & Consulting GmbH, Augsburg

LEW TelNet GmbH, Neusäß

LEW Verteilnetz GmbH, Augsburg

Little Cheyne Court Wind Farm Limited, Swindon/United Kingdom

Mátrai Erömü Zártkörüen Müködö Részvénytársaság, Visonta/Hungary

MI-FONDS 178, Frankfurt am Main

MI-FONDS F55, Frankfurt am Main

MI-FONDS G50, Frankfurt am Main

MI-FONDS G55, Frankfurt am Main

MI-FONDS J55, Frankfurt am Main

MI-FONDS K55, Frankfurt am Main

MITGAS Mitteldeutsche Gasversorgung GmbH, Halle (Saale)

Mitteldeutsche Netzgesellschaft Gas mbH, Halle (Saale)

Mitteldeutsche Netzgesellschaft Strom mbH, Halle (Saale)

Mittlere Donau Kraftwerke AG, Munich

ML Wind LLP, Swindon/United Kingdom

NEW AG, Mönchengladbach

NEW Netz GmbH, Geilenkirchen

NEW Niederrhein Energie und Wasser GmbH, Mönchengladbach

NEW NiederrheinWasser GmbH, Viersen

NEW Smart City GmbH, Mönchengladbach

NEW Tönisvorst GmbH, Tönisvorst

NEW Viersen GmbH, Viersen

Nordsee Windpark Beteiligungs GmbH, Essen

Npower Business and Social Housing Limited, Swindon/United Kingdom

Npower Commercial Gas Limited, Swindon/United Kingdom

Npower Direct Limited, Swindon/United Kingdom

Npower Financial Services Limited, Swindon/United Kingdom

Npower Gas Limited, Swindon/United Kingdom

Npower Group plc, Swindon/United Kingdom

Npower Limited, Swindon/United Kingdom

Npower Northern Limited, Swindon/United Kingdom

Npower Yorkshire Limited, Swindon/United Kingdom

Npower Yorkshire Supply Limited, Swindon/United Kingdom

NRW Pellets GmbH, Erndtebrück

Octopus Electrical Limited, Swindon/United Kingdom

OIE Aktiengesellschaft, Idar-Oberstein

Park Wiatrowy Nowy Staw Sp. z o.o., Warsaw/Poland

Park Wiatrowy Opalenica Sp. z o.o., Warsaw/Poland

Park Wiatrowy Suwalki Sp. z o.o., Warsaw/Poland

Park Wiatrowy Tychowo Sp. z o.o., Warsaw/Poland

Piecki Sp. z o.o., Warsaw/Poland

Shareholding in %

Equity

Net income/loss

Direct

Total

100

408

404

100

€ '000

1,250

8,358

139,816

44,436

299,124

800,195

606,114

1,323,501

286,700

15,589

124,357

129,245

4,171

5,113

82,464

175,895

95,699

15,587

46,613

825

13,961

13,330

8,087

3,985

1,270

101,838

– 172

– 215,893

263,741

211,895

– 1,084,270

– 729,513

312

2,440

11,190

59,111

18,317

52,536

25,459

21,091

€ '000

7,117

5,702

– 29,258

20,504

18,336

– 23,448

10,963

287

26,180

37,289

5,038

65,248

28,498

36,406

12,169

136

1,674

6,689

3,097

– 23,280

3,085

142,740

– 4,568

– 47,961

– 33,057

– 8,524

– 4,842

– 6,330

– 17,680

– 12,703

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

159

I. Affiliated companies which are included in the

consolidated financial statements

Plus Shipping Services Limited, Swindon/United Kingdom

Powerhouse B.V., Almere/Netherlands

PS Energy UK Limited, Swindon/United Kingdom

Regenesys Holdings Limited, Swindon/United Kingdom

Regenesys Technologies, Swindon/United Kingdom

regionetz GmbH, Eschweiler

Rheinbraun Brennstoff GmbH, Cologne

Rheinische Baustoffwerke GmbH, Bergheim

Rheinkraftwerk Albbruck-Dogern Aktiengesellschaft, Waldshut-Tiengen

Rhein-Sieg Netz GmbH, Siegburg

rhenag Rheinische Energie Aktiengesellschaft, Cologne

Rhenas Insurance Limited, Sliema/Malta

Rhyl Flats Wind Farm Limited, Swindon/United Kingdom

RL Besitzgesellschaft mbH, Gundremmingen

RL Beteiligungsverwaltung beschr. haft. OHG, Gundremmingen

RUMM Limited, Ystrad Mynach/United Kingdom

RV Rheinbraun Handel und Dienstleistungen GmbH, Cologne

RWE & Turcas Güney Elektrik Üretim A.S., Ankara/Turkey

RWE Aktiengesellschaft, Essen

RWE Cogen UK (Hythe) Limited, Swindon/United Kingdom

RWE Cogen UK Limited, Swindon/United Kingdom

RWE Cogen UK Trading Limited, Swindon/United Kingdom

RWE Corner Participations B.V., 's-Hertogenbosch/Netherlands

RWE Downstream Beteiligungs GmbH, Essen

RWE East, s.r.o., Prague/Czech Republic

RWE Eemshaven Holding B.V., 's-Hertogenbosch/Netherlands

RWE Eemshaven Holding II B.V., Geertruidenberg/Netherlands

RWE Energie S.R.L., Bucharest/Romania

RWE Energija d.o.o., Zagreb/Croatia

RWE Generation Belgium N.V., Antwerp/Belgium

RWE Generation NL B.V., Arnhem/Netherlands

RWE Generation NL Participations B.V., Arnhem/Netherlands

RWE Generation NL Personeel B.V., Arnhem/Netherlands

RWE Generation SE, Essen

RWE Generation UK Holdings plc, Swindon/United Kingdom

RWE Generation UK plc, Swindon/United Kingdom

RWE Hrvatska d.o.o., Zagreb/Croatia

RWE Ljubljana d.o.o., Ljubljana/Slovenia

RWE Markinch Limited, Swindon/United Kingdom

RWE Nuclear GmbH, Essen

RWE Personeel B.V., Geertruidenberg/Netherlands

RWE Plin d.o.o., Zagreb/Croatia

RWE Power Aktiengesellschaft, Cologne and Essen

Shareholding in %

Equity

Net income/loss

Direct

Total

100

€ '000

27,283

48,818

– 874

113,360

82,619

9,236

31,664

20,774

159,949

58,270

167,609

114,039

362,958

36,694

304,549

€ '000

– 834

5.900

– 885

1,757

45,836

224

8,733

13,636

34,371

– 259

6,103,456

1,411,691

11,050

164,341

35,259

13,874,855

311

– 53,422

– 8,512

706

71,040

229,496

380,771

12,152

264,673

3,057,822

1,591,465

9,553

399

– 102,179

99,858

– 40

181

2,037,209

1,430

2,262

5,153

– 14,751

– 67,163

– 8,088

– 1,063

3,542

157,231

– 1,764

7,215

1,823,646

– 302,609

– 2,705

– 1,702

– 11,228

– 40

– 328

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

160 RWE Annual Report 2017

I. Affiliated companies which are included in the

consolidated financial statements

RWE Rheinhessen Beteiligungs GmbH, Essen

RWE Supply & Trading Asia-Pacific PTE. LTD., Singapore/Singapore

RWE Supply & Trading CZ, a.s., Prague/Czech Republic

RWE Supply & Trading CZ GmbH, Essen

RWE Supply & Trading GmbH, Essen

RWE Supply & Trading (India) Private Limited, Mumbai/India

RWE Supply & Trading Participations Limited, London/United Kingdom

RWE Supply & Trading Switzerland S.A., Geneva/Switzerland

RWE Technology International GmbH, Essen

RWE Technology Tasarim ve Mühendislik Danismanlik Ticaret Limited Sirketi,
Istanbul/Turkey

RWE Technology UK Limited, Swindon/United Kingdom

RWE Trading Americas Inc., New York City/USA

RWE Trading Services GmbH, Essen

RWEST Middle East Holdings B.V., 's-Hertogenbosch/Netherlands

RWW Rheinisch-Westfälische Wasserwerksgesellschaft mbH,
Mülheim an der Ruhr

SARIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Würzburg KG,
Würzburg

SRS EcoTherm GmbH, Salzbergen

Stadtwerke Düren GmbH, Düren

Südwestsächsische Netz GmbH, Crimmitschau

Süwag Energie AG, Frankfurt am Main

Süwag Grüne Energien und Wasser GmbH, Frankfurt am Main

Süwag Vertrieb AG & Co. KG, Frankfurt am Main

Syna GmbH, Frankfurt am Main

Taciewo Sp. z o.o., Warsaw/Poland

The Hollies Wind Farm Limited, Swindon/United Kingdom

Transpower Limited, Dublin/Ireland

Triton Knoll Offshore Wind Farm Limited, Swindon/United Kingdom

Überlandwerk Krumbach GmbH, Krumbach

Verteilnetz Plauen GmbH, Plauen

VKB-GmbH, Neunkirchen

Volta Energycare N.V., Houthalen-Helchteren/Belgium

Volta Limburg B.V., Schinnen/Netherlands

Volta Service B.V., Schinnen/Netherlands

Volta Solar B.V., Heerlen/Netherlands

Volta Solar VOF, Heerlen/Netherlands

VSE Aktiengesellschaft, Saarbrücken

VSE Net GmbH, Saarbrücken

VSE Verteilnetz GmbH, Saarbrücken

VWS Verbundwerke Südwestsachsen GmbH, Lichtenstein/Sa.

Východoslovenská distribucná, a.s., Kosice/Slovakia

Shareholding in %

Equity

Net income/loss

Direct

Total

100

504

100

€ '000

57,840

2,729

1,072,918

100,669

446,778

612

9,143

28,012

12,463

847

1,442

19,421

5,735

3,348

79,480

– 10,112

16,561

27,378

1,117

€ '000

3,861

104,400

337

237

– 1,639

22,646

341

8,572

9,609

417

1,398

5,414

581,905

104,750

6,441

680

8,053

18,033

496

4,576

75,427

5,576

42,998

– 310

30,894

102

523

1,377

213,863

14,393

3,109

26,908

600,975

– 6,988

– 159

– 136

– 875

634

3,633

– 68

6,327

154

1,143

43,070

2,307

2,266

30,626

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

161

I. Affiliated companies which are included in the

consolidated financial statements

Východoslovenská energetika a.s., Kosice/Slovakia

Východoslovenská energetika Holding a.s., Kosice/Slovakia

Wendelsteinbahn GmbH, Brannenburg

Wendelsteinbahn Verteilnetz GmbH, Brannenburg

Westerwald-Netz GmbH, Betzdorf-Alsdorf

Westnetz GmbH, Dortmund

Windpark Kattenberg B.V., Zwolle/Netherlands

Windpark Zuidwester B.V., 's-Hertogenbosch/Netherlands

WKN Windkraft Nord GmbH & Co. Windpark Wönkhausen KG, Hanover

WTTP B.V., Arnhem/Netherlands

2. CR Immobilien-Vermietungsgesellschaft mbH & Co. Objekt MEAG Halle KG,
Düsseldorf

Shareholding in %

Equity

Net income/loss

Direct

Total

100

494

100

€ '000

123,008

576,445

3,318

9,875

281,306

205

10,785

1,138

11,954

– 720

€ '000

1,870

15,824

556

242

– 359

240

300

459

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

162 RWE Annual Report 2017

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Total

Adensis GmbH, Dresden

Agenzia Carboni S.R.L., Genoa/Italy

Alfred Thiel-Gedächtnis-Unterstützungskasse GmbH, Essen

Alte Haase Bergwerks-Verwaltungs-Gesellschaft mbH, Dortmund

Alvarado Solar S.L., Barcelona/Spain

AQUAVENT Gesellschaft für Umwelttechnik und regenerierbare Energien mbH,
Lützen

Aura Merger Sub LLC, Dover/USA

Belectric Australia Pty. Limited, Victoria/Australia

Belectric Chile Energia Fotovoltaica LTDA, Santiago de Chile/Chile

Belectric Espana Fotovoltaica S.L., Madrid/Spain

Belectric Inc., San Mateo/USA

Belectric International GmbH, Kolitzheim

Belectric Inversiones Latinoamericana S.L., Madrid/Spain

Belectric JV GmbH, Kolitzheim

Belectric Mexico Fotovoltaica S.de R.L. de C.V., Bosques de las Lomas/Mexico

Belectric Polska Sp. z o.o., Warsaw/Poland

Belectric PV 10 (SARL), Vendres/France

Belectric PV 5 (SARL), Vendres/France

Belectric PV 6 (SARL), Vendres/France

Belectric PV 9 (SARL), Vendres/France

Beteiligungsgesellschaft Werl mbH, Essen

bildungszentrum energie GmbH, Halle (Saale)

Bioenergie Bad Wimpfen GmbH & Co. KG, Bad Wimpfen

Bioenergie Bad Wimpfen Verwaltungs-GmbH, Bad Wimpfen

Bioenergie Kirchspiel Anhausen GmbH & Co. KG, Anhausen

Bioenergie Kirchspiel Anhausen Verwaltungs-GmbH, Anhausen

Biogas Schwalmtal GmbH & Co. KG, Schwalmtal

Biogasanlage Schwalmtal GmbH, Schwalmtal

Burgar Hill Wind Farm Limited, Swindon/United Kingdom

Catalina-Cypress Holding Limited, Swindon/United Kingdom

Causeymire Two Wind Farm Limited, Swindon/United Kingdom

Ciriè Centrale PV s.a.s. (SRL), Rome/Italy

Clavellinas Solar, S.L., Barcelona/Spain

Climagy Photovoltaikprojekt GmbH & Co. KG, Kolitzheim

Climagy Photovoltaikprojekt Verwaltungs-GmbH, Kolitzheim

Climagy PV-Freifeld GmbH & Co. KG, Kolitzheim

Climagy PV-Freifeld Verwaltungs-GmbH, Kolitzheim

Climagy PV-Sonnenanlage GmbH & Co. KG, Kolitzheim

Climagy PV-Sonnenanlage Verwaltungs-GmbH, Kolitzheim

Climagy Sonneneinstrahlung GmbH & Co. KG, Kolitzheim

Climagy Sonneneinstrahlung Verwaltungs-GmbH, Kolitzheim

Climagy Sonnenkraft GmbH & Co. KG, Kolitzheim

100

€ '000

322

284

5,113

– 70,051

3,111

– 494

– 1,034

– 478

192

– 471

– 149

– 5

– 8

– 5

– 15

1,182

613

2,266

166

787

– 5

– 29

– 25

– 16

– 30

€ '000

– 2,572

2,292

370

– 662

– 17

647

– 47

– 5

– 107

– 45

– 2

499

138

162

– 119

– 3

– 5

– 6

– 3

– 4

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

163

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Total

€ '000

Climagy Sonnenkraft Verwaltungs GmbH, Kolitzheim

Climagy Sonnenstrom GmbH & Co. KG, Kolitzheim

Climagy Sonnenstrom Verwaltungs GmbH, Kolitzheim

Climagy Stromertrag GmbH & Co. KG, Kolitzheim

Climagy Stromertrag Verwaltungs-GmbH, Kolitzheim

Clocaenog Wind Farm Limited, Swindon/United Kingdom

Cloghaneleskirt Energy Supply Limited, Tralee/Ireland

COMCO MCS S.A., Luxembourg/Luxembourg

Curns Energy Limited, Dublin/Ireland

DigiKoo GmbH, Essen

Doggerbank Project 3B Innogy Limited, Swindon/United Kingdom

Doggerbank Project 3C Limited, Swindon/United Kingdom

Doggerbank Project 3D Limited, Swindon/United Kingdom

Doggerbank Project 3E Limited, Swindon/United Kingdom

Doggerbank Project 3F Limited, Swindon/United Kingdom

E & Z Industrie-Lösungen GmbH, Essen

easyOptimize GmbH, Essen

Eko-En 1 Sp. z o.o., Warsaw/Poland

El Algarrobo (SpA), Santiago de Chile/Chile

El Chañar (SpA), Santiago de Chile/Chile

El Navajo Solar, S.L., Barcelona/Spain

El Pimiento (SpA), Santiago de Chile/Chile

El Solar SpA, Santiago de Chile/Chile

El Tamarugo (SpA), Santiago de Chile/Chile

ELMU-ÉMÁSZ Energiatároló Kft., Budapest/Hungary

Energenti plus d. o. o., Cerknica/Slovenia

Energetyka Wschod Sp. z o.o., Wroclaw/Poland

Energiegesellschaft Leimen GmbH & Co. KG, Leimen

Energiegesellschaft Leimen Verwaltungsgesellschaft mbH, Leimen

energienatur Gesellschaft für Erneuerbare Energien mbH, Siegburg

Energieversorgung Timmendorfer Strand GmbH & Co. KG, Timmendorfer Strand

Energy Ventures GmbH, Saarbrücken

enervolution GmbH, Bochum

enviaM Erneuerbare Energien Verwaltungsgesellschaft mbH, Markkleeberg

enviaM Neue Energie Management GmbH, Halle (Saale)

enviaM Zweite Neue Energie Management GmbH, Halle (Saale)

Eólica de Sarnago, S.A., Soria/Spain

ESK GmbH, Dortmund

Fernwärmeversorgung Saarlouis-Steinrausch Investitionsgesellschaft mbH,
Saarlouis

"Finelectra" Finanzgesellschaft für Elektrizitäts-Beteiligungen AG,
Hausen/Switzerland

Free Electrons LLC, Palo Alto/USA

100

– 28

– 16

286

– 4

– 3

127

19,759

– 2,771

1,305

1,619

– 4,795

– 1,028

198

112

3,196

1,563

128

7,567

9,760

155

– 2

– 32

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

164 RWE Annual Report 2017

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Fresh Energy GmbH, Berlin

FUCATUS Vermietungsgesellschaft mbH & Co. Objekt Recklinghausen KG,
Düsseldorf

Fundacja innogy w Polsce, Warsaw/Poland

Gazules I Fotovoltaica S.L., Barcelona/Spain

Gazules II Solar S.L., Barcelona/Spain

GBV Dreiunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Einunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Siebte Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Vierunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GBV Zweiunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, Essen

GKB Gesellschaft für Kraftwerksbeteiligungen mbH, Cottbus

Goole Fields II Wind Farm Limited, Swindon/United Kingdom

100

Green Gecco Verwaltungs GmbH, Essen

GWG Kommunal GmbH, Grevenbroich

Hennef (Sieg) Stromnetz GmbH & Co. KG, Hennef

Infraestructuras de Aldehuelas, S.A., Barcelona/Spain

Infrastrukturgesellschaft Netz Lübz mbH, Hanover

innogy Charge Tech GmbH, Dortmund

innogy Consulting Americas, LLC, Cambridge/USA

innogy Consulting GmbH, Essen

innogy Dritte Vermögensverwaltungs GmbH, Essen

innogy e-Mobility Limited, London/United Kingdom

innogy e-mobility US LLC, Delaware/USA

innogy Energetyka Zachod Sp. z o.o., Wroclaw/Poland

innogy indeland Windpark Eschweiler Verwaltungs GmbH, Eschweiler

INNOGY INNOVATION CENTER LTD, Tel Aviv/Israel

innogy Innovation UK Ltd., London/United Kingdom

innogy Middle East & North Africa Ltd., Dubai/UAE

innogy Offshore Wind Netherlands Participations I B.V.,
's-Hertogenbosch/Netherlands

innogy Offshore Wind Netherlands Participations II B.V.,
's-Hertogenbosch/Netherlands

innogy Offshore Wind Netherlands Participations III B.V.,
's-Hertogenbosch/Netherlands

innogy Offshore Wind Netherlands Participations IV B.V.,
's-Hertogenbosch/Netherlands

innogy Polska Solutions Sp. z o.o., Warsaw/Poland

innogy Renewables Canada Inc., Vancouver/Canada

Innogy Renewables US Wind Holdings LLC, Dover/USA

innogy Seabreeze II Verwaltungs GmbH, Essen

innogy Solar Netherlands B.V., 's-Hertogenbosch/Netherlands

innogy Stiftung für Energie und Gesellschaft gGmbH, Essen

Total

€ '000

100

268

100

428

3,833

100

196

– 4

– 24

– 470

– 16

4,626

– 135

1,602

– 1,488

148

2,562

– 2,119

54,968

– 3,104

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

165

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Total

€ '000

innogy TelNet Holding, s.r.o., Prague/Czech Republic

innogy Turkey Energi Anonim Sirketi, Istanbul/Turkey

Innogy US Renewable Projects LLC, Delaware/USA

innogy Ventures GmbH, Essen

innogy Ventures Vermögensverwaltung 4 GmbH, Essen

innogy Ventures Vermögensverwaltung 5 GmbH, Essen

innogy Windpark Bedburg Verwaltungs GmbH, Bedburg

innogy Windpark Jüchen A44n GmbH & Co. KG, Essen

Innogy Windpark Jüchen A44n Verwaltungs GmbH, Essen

Inversiones Belectric Chile LTDA, Santiago de Chile/Chile

Jerez Fotovoltaica S.L., Barcelona/Spain

Jurchen Technology USA Inc., San Mateo/USA

Kieswerk Kaarst GmbH & Co. KG, Bergheim

Kieswerk Kaarst Verwaltungs GmbH, Bergheim

Kiln Pit Hill Wind Farm Limited, Swindon/United Kingdom

Korproject Energy Sp. z o.o., Warsaw/Poland

KWS Kommunal-Wasserversorgung Saar GmbH, Saarbrücken

Las Vaguadas I Fotovoltaica S.L., Barcelona/Spain

Las Vaguadas II Solar S.L., Barcelona/Spain

Lech Energie Gersthofen GmbH & Co. KG, Gersthofen

Lech Energie Verwaltung GmbH, Augsburg

Lemonbeat GmbH, Dortmund

Lochelbank Wind Farm Limited, Swindon/United Kingdom

Lößnitz Netz GmbH & Co. KG, Lößnitz

Lößnitz Netz Verwaltungs GmbH, Lößnitz

Mátrai Erömü Központi Karbantartó KFT, Visonta/Hungary

Middlemoor Wind Farm Limited, Swindon/United Kingdom

Mitteldeutsche Netzgesellschaft Gas HD mbH, Halle (Saale)

Mitteldeutsche Netzgesellschaft mbH, Chemnitz

MotionWerk GmbH, Essen

Netzwerke Saarwellingen GmbH, Saarwellingen

NEW b_gas Eicken GmbH, Schwalmtal

NEW Re GmbH, Mönchengladbach

NEW Windenergie Verwaltung GmbH, Mönchengladbach

NEW Windpark Linnich GmbH & Co. KG, Mönchengladbach

NEW Windpark Viersen GmbH & Co. KG, Mönchengladbach

Novar Two Wind Farm Limited, Swindon/United Kingdom

Npower Northern Supply Limited, Swindon/United Kingdom

NRF Neue Regionale Fortbildung GmbH, Halle (Saale)

Oranje Wind Power B.V., 's-Hertogenbosch/Netherlands

Oranje Wind Power C.V., 's-Hertogenbosch/Netherlands

Oschatz Netz GmbH & Co. KG, Oschatz

100

– 31

720

52,749

284

– 24

1,108

195

€ '000

– 1

– 359

– 3,688

– 16

– 9

– 3

501

– 1

9.952

– 3.169

3.306

– 879

10,035

172

– 3

– 1

– 10

561

217

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

166 RWE Annual Report 2017

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Total

Oschatz Netz Verwaltungs GmbH, Oschatz

Park Wiatrowy Dolice Sp. z o.o., Warsaw/Poland

Park Wiatrowy Elk Sp. z o.o., Warsaw/Poland

Park Wiatrowy Gaworzyce Sp. z o.o., Warsaw/Poland

Park Wiatrowy Msciwojów Sp. z o.o., Warsaw/Poland

Park Wiatrowy Prudziszki Sp. z o.o., Warsaw/Poland

Park Wiatrowy Smigiel I Sp. z o.o., Warsaw/Poland

Photovoltaikkraftwerk Götz GmbH & Co. KG, Kolitzheim

Photovoltaikkraftwerk Götz Verwaltungs GmbH, Kolitzheim

Photovoltaikkraftwerk Groß Dölln Infrastruktur GmbH & Co. KG, Kolitzheim

Photovoltaikkraftwerk Groß Dölln Infrastruktur Verwaltungs-GmbH, Kolitzheim

Photovoltaikkraftwerk Reinsdorf GmbH & Co. KG, Kolitzheim

Photovoltaikkraftwerk Reinsdorf Verwaltungs GmbH, Kolitzheim

Photovoltaikkraftwerk Tramm GmbH & Co. KG, Kolitzheim

Photovoltaikkraftwerk Tramm Netzanschluss GmbH & Co. KG, Kolitzheim

Photovoltaikkraftwerk Tramm Netzanschluss Verwaltungs GmbH, Kolitzheim

Photovoltaikkraftwerk Tramm PV-Finanzierung GmbH & Co. KG, Kolitzheim

Photovoltaikkraftwerk Tramm PV-Finanzierung Verwaltungs GmbH, Kolitzheim

Photovoltaikkraftwerk Tramm Verwaltungs-GmbH, Kolitzheim

PI E&P Holding Limited, George Town/Cayman Islands

PI E&P US Holding LLC, New York City/USA

Powerhouse Energy Solutions S.L., Madrid/Spain

Primus Projekt GmbH & Co. KG, Hanover

PT Rheincoal Supply & Trading Indonesia, PT, Jakarta/Indonesia

Qualitas-AMS GmbH, Siegen

Quintana Fotovoltaica SLU, Madrid/Spain

RD Hanau GmbH, Hanau

REV LNG SSL BC LLC, Ulysses/USA

Rheinland Westfalen Energiepartner GmbH, Essen

rhenagbau GmbH, Cologne

ROTARY-MATRA Kútfúró és Karbantartó KFT, Visonta/Hungary

Rowantree Wind Farm Ltd., Swindon/United Kingdom

RWE & Turcas Dogalgaz Ithalat ve Ihracat A.S., Istanbul/Turkey

RWE Australia Pty. Ltd., Brisbane/Australia

RWE Enerji Toptan Satis A.S., Istanbul/Turkey

RWE Ingen!us Limited, Swindon/United Kingdom

RWE Innogy Serbia d.o.o., Belgrade/Serbia

RWE NSW PTY LTD, Sydney/Australia

RWE Pensionsfonds AG, Essen

RWE Power Climate Protection China GmbH, Essen

RWE Power Climate Protection Clean Energy Technology (Beijing) Co., Ltd.,
Beijing/China

RWE Power Climate Protection GmbH, Essen

100

€ '000

1,039

618

1,104

269

675

– 29

– 15

– 28

– 29

– 27

– 17

4,550

4,539

359

238

5,601

5,369

4,058

775

976

6,179

1,187

30,938

3,757

2,072

€ '000

– 65

602

– 1,806

– 1,720

– 21

– 1,956

– 3

– 4

– 3

– 5

– 6

– 3

– 12

– 172

– 178

– 26

– 19

– 3,131

– 2,062

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

167

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

RWE Power Climate Protection Southeast Asia Co., Ltd., Bangkok/Thailand

RWE Power International Ukraine LLC, Kiev/Ukraine

RWE Rhein Oel Ltd., London/United Kingdom

RWE SUPPLY TRADING TURKEY ENERJI ANONIM SIRKETI, Istanbul/Turkey

RWE Trading Services Ltd., Swindon/United Kingdom

RWE-EnBW Magyarország Energiaszolgáltató Korlátolt Felelösségü Társaság,
Budapest/Hungary

RWEST PI FRE Holding LLC, New York City/USA

RWEST PI LNG HOLDING LLC, New York City/USA

RWEST PI LNG 1 LLC, New York City/USA

RWEST PI LNG 2 LLC, New York City/USA

RWEST PI WALDEN HOLDING LLC, New York City/USA

RWEST PI WALDEN 1 LLC, New York City/USA

Santa Severa Centrale PV s.a.s. (SRL), Rome/Italy

Scarcroft Investments Limited, Swindon/United Kingdom

Scharbeutzer Energie- und Netzgesellschaft mbH & Co. KG, Scharbeutz

SchlauTherm GmbH, Saarbrücken

SEG Solarenergie Guben GmbH & Co. KG, Guben

SEG Solarenergie Guben Management GmbH, Halle (Saale)

Sofia Offshore Wind Farm Holdings Limited, Swindon/United Kingdom

SOLARENGO Energia, Unipessoal, Lda., Cascais/Portugal

Solarkraftwerk Herlheim GmbH & Co. KG, Kolitzheim

Solarkraftwerk Herlheim Verwaltungs GmbH, Kolitzheim

Solarkraftwerk Meuro GmbH & Co. KG, Kolitzheim

Solarkraftwerk Meuro Verwaltungs GmbH, Kolitzheim

Solarkraftwerk Oberspiesheim GmbH & Co. KG, Kolitzheim

Solarkraftwerk Oberspiesheim Verwaltungs GmbH, Kolitzheim

SP Solarprojekte GmbH & Co. KG, Kolitzheim

SP Solarprojekte 1 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 1 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 2 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 2 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 3 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 4 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 4 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 5 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 5 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 6 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 6 Verwaltungs-GmbH, Kolitzheim

SP Solarprojekte 7 GmbH & Co. KG, Kolitzheim

SP Solarprojekte 7 Verwaltungs-GmbH, Kolitzheim

Stadtwerke Korschenbroich GmbH, Mönchengladbach

Storage Facility 1 Ltd., Slough/United Kingdom

Direct

Total

€ '000

100

– 1

1,344

1,227

391

9,708

5,593

1,331

4,688

6,318

6,320

– 151

4,371

301

3,159

– 28

– 29

– 27

– 35

– 5,375

– 30

199

– 1

– 4

– 3

– 5

– 6

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

168 RWE Annual Report 2017

II. Affiliated companies which are not included in the consolidated financial

Shareholding in %

Equity

Net income/loss

statements due to secondary importance for the assets, liabilities, financial
position and profit or loss of the Group

Direct

Total

€ '000

Stromnetz Friedberg GmbH & Co. KG, Friedberg

Stromnetz Pulheim Verwaltung GmbH, Pulheim

Sun Data GmbH, Kolitzheim

Sunpow 1 Sp. z o.o., Warsaw/Poland

Sunrise Energy Generation Pvt. Ltd., Mumbai/India

Süwag Vertrieb Management GmbH, Frankfurt am Main

SVFR 12 (SAS), Vendres/France

Thermolux S.a.r.l., Luxembourg/Luxembourg

TWS Technische Werke der Gemeinde Saarwellingen GmbH, Saarwellingen

ucair GmbH, Berlin

Versuchsatomkraftwerk Kahl GmbH, Karlstein am Main

Verwaltungsgesellschaft Energieversorgung Timmendorfer Strand mbH,
Timmendorfer Strand

Verwaltungsgesellschaft Scharbeutzer Energie- und Netzgesellschaft mbH,
Scharbeutz

VKN Saar Geschäftsführungsgesellschaft mbH, Ensdorf

VSE - Windpark Merchingen GmbH & Co. KG, Saarbrücken

VSE - Windpark Merchingen VerwaltungsGmbH, Saarbrücken

VSE Agentur GmbH, Saarbrücken

VSE Call centrum, s.r.o., Kosice/Slovakia

VSE Ekoenergia, s.r.o., Kosice/Slovakia

VSE-Stiftung gGmbH, Saarbrücken

Wärmeversorgung Schwaben GmbH, Augsburg

Warsun Project Sp. z o.o., Warsaw/Poland

Wasser-Netzgesellschaft Kolpingstadt Kerpen GmbH & Co. KG, Kerpen

WEK Windenergie Kolkwitz GmbH & Co. KG, Kolkwitz

WIJA GmbH, Bad Neuenahr-Ahrweiler

Windkraft Hochheim GmbH & Co. KG, Hochheim

Windpark Büschdorf GmbH, Perl

Windpark Eekerpolder B.V., 's-Hertogenbosch/Netherlands

Windpark Eschweiler Beteiligungs GmbH, Stolberg

Windpark Oostpolderdijk B.V., 's-Hertogenbosch/Netherlands

Windpark Paffendorf GmbH & Co. KG, Essen

Windpark Paffendorf Verwaltungs GmbH, Essen

Windpark Verwaltungsgesellschaft mbH, Lützen

Windpark Wadern-Felsenberg GmbH, Wadern

WK Solar Project Sp. z o.o., Warsaw/Poland

WKH Windkraft Hochheim Management GmbH, Halle (Saale)

2. CR Immobilien-Vermietungsgesellschaft mbH & Co. Objekt Naumburg KG,
Düsseldorf

4Motions GmbH, Leipzig

100

– 110

4,721

573

2,800

131

2,571

– 1,184

481

2,820

– 2

– 484

1,699

– 30

116

– 39

– 8

– 1,143

9,767

– 321

– 711

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

169

III. Joint operations

Shareholding in %

Equity

Net income/loss

EnergieRegion Taunus - Goldener Grund - GmbH & Co. KG, Bad Camberg

Gas-Netzgesellschaft Kolpingstadt Kerpen GmbH & Co. KG, Kerpen

Gas-Netzgesellschaft Kreisstadt Bergheim GmbH & Co. KG, Bergheim

Greater Gabbard Offshore Winds Limited, Reading/United Kingdom

Netzgesellschaft Südwestfalen mbH & Co. KG, Netphen

N.V. Elektriciteits-Produktiemaatschappij Zuid-Nederland EPZ,
Borssele/Netherlands

Direct

Total

€ '000

29,913

4,211

3,656

1,170,493

12,264

€ '000

1,767

1,155

1,167

85,301

59,162

6,674

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

IV. Affiliated companies of joint operations

Shareholding in %

Equity

Net income/
loss

EnergieRegion Taunus - Goldener Grund Verwaltungsgesellschaft mbH,
Bad Camberg

Gas-Netzgesellschaft Kolpingstadt Kerpen Verwaltungs-GmbH, Kerpen

Direct

Total

€ '000

100

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

170 RWE Annual Report 2017

V. Joint ventures accounted for using the equity method

Shareholding in %

Equity

Net income/loss

AS 3 Beteiligungs GmbH, Essen

AVU Aktiengesellschaft für Versorgungs-Unternehmen, Gevelsberg

BEW Netze GmbH, Wipperfürth

Budapesti Disz- es Közvilagitasi Korlatolt Felelössegü Tarsasag,
Budapest/Hungary

C-Power N.V., Oostende/Belgium

Energie Nordeifel GmbH & Co. KG, Kall

FSO GmbH & Co. KG, Oberhausen

Galloper Wind Farm Holdco Limited, Swindon/United Kingdom

Gwynt Y Môr Offshore Wind Farm Limited, Swindon/United Kingdom

Innogy Venture Capital GmbH, Dortmund

Konsortium Energieversorgung Opel beschränkt haftende oHG, Karlstein

PRENU Projektgesellschaft für Rationelle Energienutzung in Neuss mbH, Neuss

Rain Biomasse Wärmegesellschaft mbH, Rain

SHW/RWE Umwelt Aqua Vodogradnja d.o.o., Zagreb/Croatia

Société Electrique de l'Our S.A., Luxembourg/Luxembourg

Stadtwerke Dülmen Dienstleistungs- und Beteiligungs-GmbH & Co. KG, Dülmen

Stadtwerke Lingen GmbH, Lingen (Ems)

Stromnetz Gersthofen GmbH & Co. KG, Gersthofen

Stromnetz Günzburg GmbH & Co. KG, Günzburg

SVS-Versorgungsbetriebe GmbH, Stadtlohn

TCP Petcoke Corporation, Dover/USA

URANIT GmbH, Jülich

Zagrebacke otpadne vode d.o.o., Zagreb/Croatia

Direct

Total

515

615

755

675

755

€ '000

38,579

99,413

6,534

30,358

211,124

8,374

43,453

– 144,596

– 102

472

32,775

178

5,693

410

513

27,700

13,471

443

2,999

20,340

22,310

70,733

205,257

€ '000

1,486

14,400

– 63

465

12,431

5,427

14,372

8,955

– 845

5,467

– 2

521

– 26

4,0892

4,942

141

2,953

8,0672

114,500

24,027

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

171

VI. Associates accounted for using the equity method

Shareholding in %

Equity

Net income/loss

Amprion GmbH, Dortmund

ATBERG - Eólicas do Alto Tâmega e Barroso, Lda., Ribeira de Pena/Portugal

Belectric Gulf Limited, Abu Dhabi/UAE

Dortmunder Energie- und Wasserversorgung GmbH (DEW 21), Dortmund

Direct

EnergieServicePlus GmbH, Düsseldorf

Energieversorgung Guben GmbH, Guben

Energieversorgung Hürth GmbH, Hürth

Energieversorgung Oberhausen AG, Oberhausen

ENNI Energie & Umwelt Niederrhein GmbH, Moers

e-regio GmbH & Co. KG, Euskirchen

EWR Aktiengesellschaft, Worms

EWR Dienstleistungen GmbH & Co. KG, Worms

EWR GmbH - Energie und Wasser für Remscheid, Remscheid

Freiberger Stromversorgung GmbH (FSG), Freiberg

Gas- und Wasserwerke Bous-Schwalbach GmbH, Bous

GNS Gesellschaft für Nuklear-Service mbH, Essen

Grosskraftwerk Mannheim Aktiengesellschaft, Mannheim

HIDROERG - Projectos Energéticos, Lda., Lisbon/Portugal

Innogy Renewables Technology Fund I GmbH & Co. KG, Dortmund

Kärntner Energieholding Beteiligungs GmbH, Klagenfurt/Austria

KELAG-Kärntner Elektrizitäts-AG, Klagenfurt/Austria

Kemkens B.V., Oss/Netherlands

KEW Kommunale Energie- und Wasserversorgung AG, Neunkirchen

MAINGAU Energie GmbH, Obertshausen

medl GmbH, Mülheim an der Ruhr

Mingas-Power GmbH, Essen

Nebelhornbahn-Aktiengesellschaft, Oberstdorf

Total

106

785

136

€ '000

1,651,100

4,283

2,465

188,831

2,501

16,895

4,961

32,345

32,915

85,218

74,307

135,649

83,816

10,038

14,137

34,950

114,141

12,601

26,907

844,507

817,158

35,548

74,764

34,833

21,829

7,002

5,361

PEARL PETROLEUM COMPANY LIMITED, Road Town/British Virgin Islands

107

2,401,402

Pfalzwerke Aktiengesellschaft, Ludwigshafen

Projecta 14 GmbH, Saarbrücken

Propan Rheingas GmbH & Co KG, Brühl

Recklinghausen Netzgesellschaft mbH & Co. KG, Recklinghausen

RheinEnergie AG, Cologne

Rhein-Main-Donau AG, Munich

Schluchseewerk Aktiengesellschaft, Laufenburg Baden

Siegener Versorgungsbetriebe GmbH, Siegen

SpreeGas Gesellschaft für Gasversorgung und Energiedienstleistung mbH,
Cottbus

SSW Stadtwerke St. Wendel GmbH & Co. KG, St. Wendel

Stadtwerke Aschersleben GmbH, Aschersleben

Stadtwerke Bernburg GmbH, Bernburg (Saale)

Stadtwerke Bitterfeld-Wolfen GmbH, Bitterfeld-Wolfen

Stadtwerke Duisburg Aktiengesellschaft, Duisburg

Stadtwerke Emmerich GmbH, Emmerich am Rhein

244,154

38,315

7,737

16,030

886,918

110,169

59,339

24,872

34,516

20,215

17,459

32,759

20,039

189,336

12,115

€ '000

158,100

595

2,065

1,241

13,699

14,006

7,914

7,941

14,920

1,283

3,178

29,8492

6,647

2,234

977

89,6652

86,993

9,313

11,550

11,183

6,333

419

341,238

51,212

2,090

898

1,112

154,826

2,809

4,586

5,944

2,223

2,969

6,306

1,812

4,700

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

172 RWE Annual Report 2017

VI. Associates accounted for using the equity method

Shareholding in %

Equity

Net income/loss

Stadtwerke Essen Aktiengesellschaft, Essen

Stadtwerke Geldern GmbH, Geldern

Stadtwerke GmbH Bad Kreuznach, Bad Kreuznach

Stadtwerke Kamp-Lintfort GmbH, Kamp-Lintfort

Stadtwerke Kirn GmbH, Kirn

Stadtwerke Meerane GmbH, Meerane

Stadtwerke Merseburg GmbH, Merseburg

Stadtwerke Merzig GmbH, Merzig

Stadtwerke Neuss Energie und Wasser GmbH, Neuss

Stadtwerke Radevormwald GmbH, Radevormwald

Stadtwerke Ratingen GmbH, Ratingen

Stadtwerke Reichenbach/Vogtland GmbH, Reichenbach im Vogtland

Stadtwerke Saarlouis GmbH, Saarlouis

Stadtwerke Velbert GmbH, Velbert

Stadtwerke Weißenfels GmbH, Weißenfels

Stadtwerke Willich GmbH, Willich

Stadtwerke Zeitz GmbH, Zeitz

SWTE Netz GmbH & Co. KG, Ibbenbüren

Vliegasunie B.V., De Bilt/Netherlands

Wasser- und Energieversorgung Kreis St. Wendel GmbH, St. Wendel

wbm Wirtschaftsbetriebe Meerbusch GmbH, Meerbusch

Xelan SAS, Saint-Denis La Plaine/France

Zagrebacke otpadne vode-upravljanje i pogon d.o.o., Zagreb/Croatia

Zwickauer Energieversorgung GmbH, Zwickau

Direct

Total

605

€ '000

128,679

12,875

39,925

14,868

2,154

14,846

22,092

15,906

88,344

6,037

55,812

13,835

37,022

82,005

24,825

13,981

21,379

36,751

9,949

22,960

23,543

264

2,887

43,360

€ '000

27,426

3,094

3,678

268

2,443

4,108

3,135

14,761

2,445

5,465

1,786

4,586

4,981

4,144

3,645

4,988

1,642

1,867

4,336

– 159

3,548

10,466

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

173

VII. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and
profit or loss of the Group

Abwasser-Gesellschaft Knapsack, Gesellschaft mit beschränkter Haftung, Hürth

Alt Han Company Limited, London/United Kingdom

Ascent Energy LLC, Wilmington/USA

Awotec Gebäude Servicegesellschaft mbH, Saarbrücken

Bäderbetriebsgesellschaft St. Ingbert GmbH, St. Ingbert

Balve Netz GmbH & Co. KG, Balve

Bayerische Ray Energietechnik GmbH, Garching

Biogas Wassenberg GmbH & Co. KG, Wassenberg

Biogas Wassenberg Verwaltungs GmbH, Wassenberg

Breer Gebäudedienste Heidelberg GmbH, Heidelberg

Breitband-Infrastrukturgesellschaft Cochem-Zell mbH, Cochem

Brüggen.E-Netz GmbH & Co. KG, Brüggen

Brüggen.E-Netz Verwaltungs-GmbH, Brüggen

CARBON Climate Protection GmbH, Langenlois/Austria

CARBON Egypt Ltd., Cairo/Egypt

CECEP Ningxia New Energy Resources Joint Stock Co., Ltd., Yinchuan/China

Centralny System Wymiany Informacji Sp. z o.o., Poznan/Poland

Conjoule GmbH, Essen

DES Dezentrale Energien Schmalkalden GmbH, Schmalkalden

Deutsche Gesellschaft für Wiederaufarbeitung von Kernbrennstoffen AG & Co.
oHG, Gorleben

Dii GmbH, Munich

Discovergy GmbH, Aachen

Dorsten Netz GmbH & Co. KG, Dorsten

EfD Energie-für-Dich GmbH, Potsdam

ELE-GEW Photovoltaikgesellschaft mbH, Gelsenkirchen

ELE-RAG Montan Immobilien Erneuerbare Energien GmbH, Bottrop

ELE-Scholven-Wind GmbH, Gelsenkirchen

Elsta B.V., Middelburg/Netherlands

Elsta B.V. & CO C.V., Middelburg/Netherlands

EMDO S.A.S., Paris/France

Energie BOL GmbH, Ottersweier

Energie Mechernich GmbH & Co. KG, Mechernich

Energie Mechernich Verwaltungs-GmbH, Mechernich

Energie Nordeifel Beteiligungs-GmbH, Kall

Energie Schmallenberg GmbH, Schmallenberg

Energiepartner Dörth GmbH, Dörth

Energiepartner Elsdorf GmbH, Elsdorf

Energiepartner Hermeskeil GmbH, Hermeskeil

Energiepartner Kerpen GmbH, Kerpen

Energiepartner Niederzier GmbH, Niederzier

Energiepartner Projekt GmbH, Essen

Energiepartner Solar Kreuztal GmbH, Kreuztal

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

461

8,312

1,251

1,248

504

– 592

3,249

2,347

– 1,366

18,645

280

1,256

288

5,805

667

47,499

47,722

4,194

€ '000

231

– 985

– 9

551

224

556

1,291

– 1,067

745

– 124

833

142

33,814

33,892

451

– 1

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

174 RWE Annual Report 2017

VII. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and
profit or loss of the Group

Energiepartner Wesseling GmbH, Wesseling

Energie-Service-Saar GmbH, Völklingen

Energieversorgung Bad Bentheim GmbH & Co. KG, Bad Bentheim

Energieversorgung Bad Bentheim Verwaltungs-GmbH, Bad Bentheim

Energieversorgung Beckum GmbH & Co. KG, Beckum

Energieversorgung Beckum Verwaltungs-GmbH, Beckum

Energieversorgung Horstmar/Laer GmbH & Co. KG, Horstmar

Energieversorgung Kranenburg Netze GmbH & Co. KG, Kranenburg

Energieversorgung Kranenburg Netze Verwaltungs GmbH, Kranenburg

Energieversorgung Marienberg GmbH, Marienberg

Energieversorgung Niederkassel GmbH & Co. KG, Niederkassel

Energieversorgung Oelde GmbH, Oelde

Energotel, a.s., Bratislava/Slovakia

energy4u GmbH & Co. KG, Siegburg

ENERVENTIS GmbH & Co. KG, Saarbrücken

Erdgasversorgung Industriepark Leipzig Nord GmbH, Leipzig

Erdgasversorgung Schwalmtal GmbH & Co. KG, Viersen

Erdgasversorgung Schwalmtal Verwaltungs-GmbH, Viersen

Erneuerbare Energien Rheingau-Taunus GmbH, Bad Schwalbach

eShare.one GmbH, Dortmund

Esta VOF, Ridderkerk/Netherlands

evm Windpark Höhn GmbH & Co. KG, Höhn

EWV Baesweiler GmbH & Co. KG, Baesweiler

EWV Baesweiler Verwaltungs GmbH, Baesweiler

FAMOS - Facility Management Osnabrück GmbH, Osnabrück

Fassi Coal Pty. Ltd., Newcastle-Rutherford/Australia

Fernwärmeversorgung Zwönitz GmbH (FVZ), Zwönitz

First River Energy LLC, Denver/USA

Focal Energy Photovoltaic Holdings Limited, Nicosia/Cyprus

Foton Technik Sp. z o.o., Warsaw/Poland

FSO Verwaltungs-GmbH, Oberhausen

Gasgesellschaft Kerken Wachtendonk mbH, Kerken

Gas-Netzgesellschaft Bedburg GmbH & Co. KG, Bedburg

Gas-Netzgesellschaft Elsdorf GmbH & Co. KG, Elsdorf

Gasnetzgesellschaft Mettmann GmbH & Co. KG, Mettmann

Gas-Netzgesellschaft Rheda-Wiedenbrück GmbH & Co. KG, Rheda-Wiedenbrück

Gas-Netzgesellschaft Rheda-Wiedenbrück Verwaltungs-GmbH,
Rheda-Wiedenbrück

Gasnetzgesellschaft Wörrstadt mbH & Co. KG, Saulheim

Gasnetzgesellschaft Wörrstadt Verwaltung mbH, Wörrstadt

Geiger Netzbau GmbH, Mindelheim

Gemeindewerke Bad Sassendorf Netze GmbH & Co. KG, Bad Sassendorf

Gemeindewerke Bad Sassendorf Netze Verwaltung GmbH, Bad Sassendorf

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

– 1,796

2,919

5,410

2,300

1,698

3,007

2,745

8,260

6,805

1,090

436

3,109

479

– 655

2,420

100

– 7,259

3,296

– 1,321

1,476

162

4,405

1,301

1,000

2,184

– 159

2,129

€ '000

– 6

566

3,117

308

206

1,173

164

2,685

1,293

513

3,654

– 550

1,047

405

331

– 7,479

– 4

588

202

785

– 184

302

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

175

VII. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and
profit or loss of the Group

Gemeindewerke Bissendorf Netz GmbH & Co. KG, Bissendorf

Gemeindewerke Bissendorf Netz Verwaltungs-GmbH, Bissendorf

Gemeindewerke Everswinkel GmbH, Everswinkel

Gemeindewerke Namborn GmbH, Namborn

Gemeinschaftswerk Hattingen Gesellschaft mit beschränkter Haftung, Essen

GfB, Gesellschaft für Baudenkmalpflege mbH, Idar-Oberstein

GfS Gesellschaft für Simulatorschulung mbH, Essen

Gichtgaskraftwerk Dillingen GmbH & Co. KG, Saarbrücken

GISA GmbH, Halle (Saale)

GkD Gesellschaft für kommunale Dienstleistungen mbH, Cologne

G&L Gastro-Service GmbH, Augsburg

GNEE Gesellschaft zur Nutzung erneuerbarer Energien mbH Freisen, Freisen

GREEN GECCO Beteiligungsgesellschaft mbH & Co. KG, Troisdorf

GREEN GECCO Beteiligungsgesellschaft-Verwaltungs GmbH, Troisdorf

GREEN Gesellschaft für regionale und erneuerbare Energie mbH, Stolberg

Green Solar Herzogenrath GmbH, Herzogenrath

Greenergetic GmbH, Bielefeld

Greenplug GmbH, Hamburg

HaseNetz GmbH & Co. KG, Gehrde

HCL Netze GmbH & Co. KG, Herzebrock-Clarholz

Heizkraftwerk Zwickau Süd GmbH & Co. KG, Zwickau

hmstr GmbH, Saarbrücken

Hochsauerland Netze GmbH & Co. KG, Meschede

Hochsauerland Netze Verwaltung GmbH, Meschede

H.W.B. Solar Ltd., Be’er Scheva/Israel

innogy International Middle East, Dubai/UAE

innogy.C3 GmbH, Essen

IWW Rheinisch-Westfälisches Institut für Wasserforschung gemeinnützige GmbH,
Mülheim an der Ruhr

Kavernengesellschaft Staßfurt mbH, Staßfurt

KAWAG AG & Co. KG, Pleidelsheim

KAWAG Netze GmbH & Co. KG, Abstatt

KAWAG Netze Verwaltungsgesellschaft mbH, Abstatt

KDT Kommunale Dienste Tholey GmbH, Tholey

KEN Geschäftsführungsgesellschaft mbH, Neunkirchen

KEN GmbH & Co. KG, Neunkirchen

KEVAG Telekom GmbH, Koblenz

Kiwigrid GmbH, Dresden

KlickEnergie GmbH & Co. KG, Neuss

KlickEnergie Verwaltungs-GmbH, Neuss

KnGrid, Inc., Laguna Hills/USA

Kommunale Dienste Marpingen GmbH, Marpingen

Kommunale Netzgesellschaft Steinheim a. d. Murr GmbH & Co. KG,
Steinheim a. d. Murr

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

2,786

6,935

828

2,045

30,989

9,184

52,921

677

3,822

921

610

2.180

3.254

1.000

5.643

– 1.972

901

886

14.561

2.328

1.307

2.845

2.236

9,302

– 832

2,672

4,968

€ '000

511

498

– 189

– 64

4,445

3,584

– 5

2,003

404

– 2,361

– 2

356

352

1.453

841

153

501

– 7,605

– 664

– 1

– 9

348

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

176 RWE Annual Report 2017

VII. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and
profit or loss of the Group

Kommunalwerk Rudersberg GmbH & Co. KG, Rudersberg

Kommunalwerk Rudersberg Verwaltungs-GmbH, Rudersberg

Kraftwerk Buer GbR, Gelsenkirchen

Kraftwerk Wehrden GmbH, Völklingen

KSG Kraftwerks-Simulator-Gesellschaft mbH, Essen

KSP Kommunaler Service Püttlingen GmbH, Püttlingen

KÜCKHOVENER Deponiebetrieb GmbH & Co. Kommanditgesellschaft, Bergheim

KÜCKHOVENER Deponiebetrieb Verwaltungs-GmbH, Bergheim

KVK Kompetenzzentrum Verteilnetze und Konzessionen GmbH, Cologne

LDO Coal Pty. Ltd., Ruthersford/Australia

Mainzer Wärme PLUS GmbH, Mainz

MeteringSüd GmbH & Co. KG, Augsburg

MNG Stromnetze GmbH & Co. KG, Lüdinghausen

MNG Stromnetze Verwaltungs GmbH, Lüdinghausen

Moravske Hidroelektrane d.o.o., Belgrade/Serbia

Murrhardt Netz AG & Co. KG, Murrhardt

Naturstrom Betriebsgesellschaft Oberhonnefeld mbH, Koblenz

Netzanbindung Tewel OHG, Cuxhaven

Netzgesellschaft Bedburg Verwaltungs GmbH, Bedburg

Netzgesellschaft Betzdorf GmbH & Co. KG, Betzdorf

Netzgesellschaft Bühlertal GmbH & Co. KG, Bühlertal

Netzgesellschaft Elsdorf Verwaltungs-GmbH, Elsdorf

Netzgesellschaft Grimma GmbH & Co. KG, Grimma

Netzgesellschaft Hüllhorst GmbH Co. KG, Hüllhorst

Netzgesellschaft Korb GmbH & Co. KG, Korb

Netzgesellschaft Korb Verwaltungs-GmbH, Korb

Netzgesellschaft Kreisstadt Bergheim Verwaltungs-GmbH, Bergheim

Netzgesellschaft Lauf GmbH & Co. KG, Lauf

Netzgesellschaft Leutenbach GmbH & Co. KG, Leutenbach

Netzgesellschaft Leutenbach Verwaltungs-GmbH, Leutenbach

Netzgesellschaft Maifeld GmbH & Co. KG, Polch

Netzgesellschaft Maifeld Verwaltungs GmbH, Polch

Netzgesellschaft Ottersweier GmbH & Co. KG, Ottersweier

Netzgesellschaft Rheda-Wiedenbrück GmbH & Co. KG, Rheda-Wiedenbrück

Netzgesellschaft Rheda-Wiedenbrück Verwaltungs-GmbH, Rheda-Wiedenbrück

NFPA Holdings Limited, Newcastle Upon Tyne/United Kingdom

NiersEnergieNetze GmbH & Co. KG, Kevelaer

NiersEnergieNetze Verwaltungs-GmbH, Kevelaer

Novenerg limited liability company for energy activities, Zagreb/Croatia

Offshore Trassenplanungs-GmbH OTP i.L., Hanover

pear.ai Inc., San Francisco/USA

Peißenberger Wärmegesellschaft mbH, Peißenberg

prego services GmbH, Saarbrücken

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

167

5,113

564

153

135

– 185

7,632

404

20,440

3,700

2,790

159

699

2,288

7,670

1,416

759

1,528

6,162

2,033

3,079

2,017

6,167

163

€ '000

– 15

1,435

1,346

– 21

2,841

– 16

229

– 12

159

507

104

644

158

483

273

507

5,905

– 2,624

– 433

5,097

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

177

VII. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and
profit or loss of the Group

Propan Rheingas GmbH, Brühl

PV Projects GmbH & Co. KG, Kolitzheim

PV Projects Komplementär GmbH, Kolitzheim

Recklinghausen Netz-Verwaltungsgesellschaft mbH, Recklinghausen

Renergie Stadt Wittlich GmbH, Wittlich

Rhegio Natur Dienstleistungen GmbH, Rhede

RIWA GmbH Gesellschaft für Geoinformationen, Kempten

RurEnergie GmbH, Düren

Sandersdorf-Brehna Netz GmbH & Co. KG, Sandersdorf-Brehna

Selm Netz GmbH & Co. KG, Selm

SHS Ventures GmbH & Co. KGaA, Völklingen

Sofia Offshore Wind Farm Limited, Reading/United Kingdom

SolarProjekt Mainaschaff GmbH, Mainaschaff

SPX, s.r.o., Zilina/Slovakia

SSW Stadtwerke St. Wendel Geschäftsführungsgesellschaft mbH, St. Wendel

Stadtentwässerung Schwerte GmbH, Schwerte

Städtische Werke Borna GmbH, Borna

Städtisches Wasserwerk Eschweiler GmbH, Eschweiler

Stadtwerke - Strom Plauen GmbH & Co. KG, Plauen

Stadtwerke Ahaus GmbH, Ahaus

Stadtwerke Aue GmbH, Aue

Stadtwerke Dillingen/Saar GmbH, Dillingen

Stadtwerke Dülmen Verwaltungs-GmbH, Dülmen

Stadtwerke Gescher GmbH, Gescher

Stadtwerke Geseke Netze GmbH & Co. KG, Geseke

Stadtwerke Geseke Netze Verwaltung GmbH, Geseke

Stadtwerke Goch Netze GmbH & Co. KG, Goch

Stadtwerke Goch Netze Verwaltungsgesellschaft mbH, Goch

Stadtwerke Haan GmbH, Haan

Stadtwerke Kerpen GmbH & Co. KG, Kerpen

Stadtwerke Kerpen Verwaltungs-GmbH (in Gründung), Kerpen

Stadtwerke Langenfeld GmbH, Langenfeld

Stadtwerke Oberkirch GmbH, Oberkirch

Stadtwerke Roßlau Fernwärme GmbH, Dessau-Roßlau

Stadtwerke Schwarzenberg GmbH, Schwarzenberg/Erzgeb.

Stadtwerke Siegburg GmbH & Co. KG, Siegburg

Stadtwerke Steinfurt GmbH, Steinfurt

Stadtwerke Unna GmbH, Unna

Stadtwerke Verl Netz GmbH & Co. KG, Verl

Stadtwerke Vlotho GmbH, Vlotho

Stadtwerke Wadern GmbH, Wadern

Stadtwerke Waltrop Netz GmbH & Co. KG, Waltrop

Stadtwerke Weilburg GmbH, Weilburg

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

377

1,282

10,454

4,826

4,003

185

153

124

5,316

2,209

5,699

11,086

12,851

6,929

3,307

3,880

2,886

€ '000

285

– 1

369

– 138

175

778

– 15

– 2

885

683

1,442

1,656

1,968

661

837

319

20,454

1,604

500

608

418

1,327

250

3,217

123

875

318

874

8,551

7,192

1,599

14,551

100

10,945

15,110

4,880

4,678

2,862

8,177

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

178 RWE Annual Report 2017

VII. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and
profit or loss of the Group

Stadtwerke Werl GmbH, Werl

STEAG Windpark Ullersdorf GmbH & Co. KG, Jamlitz

Stromnetz Diez GmbH & Co. KG, Diez

Stromnetz Diez Verwaltungsgesellschaft mbH, Diez

Stromnetz Euskirchen GmbH & Co. KG, Euskirchen

Stromnetz Günzburg Verwaltungs GmbH, Günzburg

Stromnetz Hofheim GmbH & Co. KG, Hofheim am Taunus

Stromnetz Hofheim Verwaltungs GmbH, Hofheim am Taunus

Stromnetz Verbandsgemeinde Katzenelnbogen GmbH & Co. KG, Katzenelnbogen

Stromnetz Verbandsgemeinde Katzenelnbogen Verwaltungsgesellschaft mbH,
Katzenelnbogen

Stromnetz VG Diez GmbH & Co. KG, Altendiez

STROMNETZ VG DIEZ Verwaltungsgesellschaft mbH, Altendiez

Strom-Netzgesellschaft Bedburg GmbH & Co. KG, Bedburg

Stromnetzgesellschaft Bramsche mbH & Co. KG, Bramsche

Strom-Netzgesellschaft Elsdorf GmbH & Co. KG, Elsdorf

Stromnetzgesellschaft Gescher GmbH & Co. KG, Gescher

Strom-Netzgesellschaft Kolpingstadt Kerpen GmbH & Co. KG, Kerpen

Strom-Netzgesellschaft Kreisstadt Bergheim GmbH & Co. KG, Bergheim

Stromnetzgesellschaft Mettmann mbH & Co. KG, Mettmann

Stromnetzgesellschaft Neuenhaus mbH & Co. KG, Neuenhaus

Stromnetzgesellschaft Neuenhaus Verwaltungs-GmbH, Neuenhaus

Stromnetzgesellschaft Neunkirchen-Seelscheid mbH & Co. KG,
Neunkirchen-Seelscheid

Stromnetzgesellschaft Schwalmtal mbH & Co. KG, Schwalmtal

Stromverwaltung Schwalmtal GmbH, Schwalmtal

Südwestfalen Netz-Verwaltungsgesellschaft mbH, Netphen

SWL-energis Netzgesellschaft mbH & Co. KG, Lebach

SWL-energis-Geschäftsführungs-GmbH, Lebach

SWT trilan GmbH, Trier

SWTE Netz Verwaltungsgesellschaft mbH, Ibbenbüren

Technische Werke Naumburg GmbH, Naumburg (Saale)

TEPLO Votice s.r.o., Votice/Czech Republic

The Bristol Bulk Company Limited, London/United Kingdom

TNA Talsperren- und Grundwasser-Aufbereitungs- und Vertriebsgesellschaft mbH,
Saarbrücken

Toledo PV A.E.I.E., Madrid/Spain

TRANSELEKTRO, s.r.o., Kosice/Slovakia

TWE Technische Werke der Gemeinde Ensdorf GmbH, Ensdorf

TWL Technische Werke der Gemeinde Losheim GmbH, Losheim

TWM Technische Werke der Gemeinde Merchweiler GmbH, Merchweiler

TWN Trinkwasserverbund Niederrhein GmbH, Grevenbroich

TWRS Technische Werke der Gemeinde Rehlingen-Siersburg GmbH, Rehlingen

Umspannwerk Putlitz GmbH & Co. KG, Frankfurt am Main

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

7,035

17,772

1,483

4,100

3,455

2,279

2,401

3,612

3,305

4,717

3,358

2,626

3,566

3,239

1,299

10,625

103

1,067

1,926

627

2,119

7,218

2,084

143

4,686

€ '000

2,291

100

581

255

178

173

419

305

607

343

314

571

177

499

650

587

– 51

168

1,585

– 5

161

– 197

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

179

VII. Companies which are not accounted for using the equity method due to
secondary importance for the assets, liabilities, financial position and
profit or loss of the Group

Untere Iller Aktiengesellschaft, Landshut

Untermain EnergieProjekt AG & Co. KG, Kelsterbach

Untermain Erneuerbare Energien Verwaltungs-GmbH, Raunheim

Untermain ErneuerbareEnergien GmbH & Co. KG, Raunheim

Veiligebuurt B.V., Enschede/Netherlands

VEM Neue Energie Muldental GmbH & Co. KG, Markkleeberg

Verteilnetze Energie Weißenhorn GmbH & Co. KG, Weißenhorn

Verwaltungsgesellschaft Dorsten Netz mbH, Dorsten

Verwaltungsgesellschaft Energie Weißenhorn GmbH, Weißenhorn

Verwaltungsgesellschaft GKW Dillingen mbH, Saarbrücken

Voltaris GmbH, Maxdorf

Wadersloh Netz GmbH & Co. KG, Wadersloh

Wadersloh Netz Verwaltungs GmbH, Wadersloh

WALDEN GREEN ENERGY LLC, New York City/USA

Wärmeversorgung Limburg GmbH, Limburg an der Lahn

Wärmeversorgung Mücheln GmbH, Mücheln

Wärmeversorgung Wachau GmbH, Markkleeberg OT Wachau

Wärmeversorgung Würselen GmbH, Würselen

Wasserverbund Niederrhein Gesellschaft mit beschränkter Haftung, Krefeld

Wasserversorgung Main-Taunus GmbH, Frankfurt am Main

Wasserzweckverband der Gemeinde Nalbach, Nalbach

WeAre GmbH, Essen

WEV Warendorfer Energieversorgung GmbH, Warendorf

Windenergie Briesensee GmbH, Neu Zauche

Windenergie Frehne GmbH & Co. KG, Marienfließ

Windenergie Merzig GmbH, Merzig

Windenergiepark Heidenrod GmbH, Heidenrod

Windesco Inc, Electron/USA

Windkraft Jerichow - Mangelsdorf I GmbH & Co. KG, Burg

Windpark Losheim-Britten GmbH, Losheim

Windpark Nohfelden-Eisen GmbH, Nohfelden

Windpark Oberthal GmbH, Oberthal

Windpark Perl GmbH, Perl

WINDTEST Grevenbroich GmbH, Grevenbroich

WLN Wasserlabor Niederrhein GmbH, Mönchengladbach

WVG-Warsteiner Verbundgesellschaft mbH, Warstein

WVL Wasserversorgung Losheim GmbH, Losheim

WWS Wasserwerk Saarwellingen GmbH, Saarwellingen

WWW Wasserwerk Wadern GmbH, Wadern

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

1,134

1,992

906

181

2,431

€ '000

100

– 14

– 8

310

1,648

6,342

– 1,167

455

894

1,524

11,188

136

1,758

12,243

1,248

5,796

3,837

12,798

1,234

4,167

1,972

3,448

4,659

7,985

1,175

523

3,600

5,193

3,628

3,704

– 1

– 2

633

1,963

– 89

522

927

– 460

579

– 19

– 20

136

256

276

449

228

298

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

180 RWE Annual Report 2017

VIII. Other investments

Abel & Co., Tilburg/Netherlands

Adom Intelligent Transport Ltd., Tel Aviv-Jaffa/Israel

aiPod Inc, Pasadena/USA

APEP Dachfonds GmbH & Co. KG, Munich

BeeRides Kft., Székesfehérvár/Hungary

BEW Bergische Energie- und Wasser-GmbH, Wipperfürth

BFG-Bernburger Freizeit GmbH, Bernburg (Saale)

BIDGELY Inc., Sunnyvale/USA

BigchainDB GmbH, Berlin

Blackhawk Mining LLC, Lexington/USA

Bürgerenergie Untermain eG, Kelsterbach

CELP II Chrysalix Energy II US Limited Partnership, Vancouver/Canada

CELP III Chrysalix Energy III US Limited Partnership, Vancouver/Canada

DCUSA Ltd, London/United Kingdom

Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern

Die BürgerEnergie eG, Dortmund

Doozer Real Estate Systems GmbH, Berlin

Dry Bulk Partners 2013 LP, Grand Cayman/Cayman Islands

eins energie in sachsen GmbH & Co. KG, Chemnitz

eluminocity GmbH, Munich

Energías Renovables de Ávila, S.A., Madrid/Spain

Energie Rur-Erft GmbH & Co. KG, Essen

Energie Rur-Erft Verwaltungs-GmbH, Essen

Energieagentur Region Trier GmbH, Trier

Energiegenossenschaft Chemnitz-Zwickau eG, Chemnitz

Energiehandel Saar GmbH & Co. KG, Neunkirchen

Energiehandel Saar Verwaltungs-GmbH, Neunkirchen

Energieversorgung Limburg GmbH, Limburg an der Lahn

Entwicklungsgesellschaft Neu-Oberhausen mbH-ENO, Oberhausen

ESV-ED GmbH & Co. KG, Buchloe

Focal Energy Solar Three Ltd., Nicosia/Cyprus

GasLINE Telekommunikationsnetz-Geschäftsführungsgesellschaft deutscher
Gasversorgungsunternehmen mbH, Straelen

GasLINE Telekommunikationsnetzgesellschaft deutscher Gasversorgungsunter-
nehmen mbH & Co. KG, Straelen

Gemeinschafts-Lehrwerkstatt Arnsberg GmbH, Arnsberg

Gemserv Limited, London/United Kingdom

Gesellschaft für Wirtschaftsförderung Duisburg mbH, Duisburg

Globus Steel & Power Pvt. Limited, New Delhi/India

Gründerfonds Ruhr GmbH & Co. KG, Essen

Heliatek GmbH, Dresden

High-Tech Gründerfonds II GmbH & Co. KG, Bonn

HOCHTEMPERATUR-KERNKRAFTWERK Gesellschaft mit beschränkter Haftung (HKG).
Gemeinsames Europäisches Unternehmen, Hamm

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

70,192

6,467

– 1,379

– 5,079

362,527

30,814

9,996

9,240

– 194,225

– 160,597

10,290

121,044

16,899

1,797

4,884

464,069

595

1,120

614

396

28,038

657

370

5,430

– 966

– 7,168

1,426

111

– 4,949

79,267

1,095

– 5

4,958

– 945

– 4

77,213

36,213

1,465

8,203

721

– 435

8,414

77,263

1,812

– 378

– 7,701

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

181

VIII. Other investments

Hubject GmbH, Berlin

INDI Energie B.V., 's-Hertogenbosch/Netherlands

Intertrust Technologies Corporation, Sunnyvale/USA

iTy Labs Corp., Dover/USA

IZES gGmbH, Saarbrücken

KEV Energie GmbH, Kall

Kreis-Energie-Versorgung Schleiden GmbH, Kall

LEW Bürgerenergie e.G., Augsburg

LIBRYO LTD, London/United Kingdom

Moj.io Inc., Vancouver/Canada

Move24 Group GmbH, Berlin

MRA Service Company Limited, London/United Kingdom

Neckar-Aktiengesellschaft, Stuttgart

Neue Energie Ostelbien eG, Arzberg

Neustromland GmbH & Co. KG, Saarbrücken

Nordsee One GmbH, Hamburg

Nordsee Three GmbH, Hamburg

Nordsee Two GmbH, Hamburg

Ökostrom Saar Geschäftsführungsgesellschaft mbH & Co. Biogas Losheim KG,
Merzig

OPPENHEIM PRIVATE EQUITY Institutionelle Anleger GmbH & Co. KG, Cologne

Parque Eólico Cassiopea, S.L., Oviedo/Spain

Parque Eólico Escorpio, S.A., Oviedo/Spain

Parque Eólico Leo, S.L., Oviedo/Spain

Parque Eólico Sagitario, S.L., Oviedo/Spain

PEAG Holding GmbH, Dortmund

People Power Company, Redwood City/USA

pro regionale energie eG, Diez

Promocion y Gestion Cáncer, S.L., Oviedo/Spain

PSI AG für Produkte und Systeme der Informationstechnologie, Berlin

REV LNG LLC, Ulysses/USA

ROSOLA Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Alzenau KG,
Düsseldorf

Royal Armouries (International) plc, Leeds/United Kingdom

Rydies GmbH, Hanover

SALUS Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Leipzig KG,
Düsseldorf

ScanTrust SA, Lausanne/Switzerland

Sdruzení k vytvorení a vyuzívání digitální technické mapy mesta Pardubic,
Pardubice/Czech Republic

SE SAUBER ENERGIE GmbH & Co. KG, Cologne

SE SAUBER ENERGIE Verwaltungs-GmbH, Cologne

SET Fund II C.V., Amsterdam/Netherlands

SET Sustainable Energy Technology Fund C.V., Amsterdam/Netherlands

Shareholding in %

Equity

Net income/loss

Direct

Total

€ '000

100

551

– 23

€ '000

– 1,900

– 123

70,580

– 17,640

480

457

16,098

1,744

7,964

10,179

2,757

38,263

122

442

– 21

481

126

– 29

17,926

837

1,392

– 29

83,251

3,072

2,610

7,937

1,590

134

22,212

17,177

– 144

1,906

– 1,628

128

– 8,172

– 22

– 23

190

742

– 74

– 18

– 153

3,117

– 2,275

3,130

237

426

1,916

264

342

– 611

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

182 RWE Annual Report 2017

VIII. Other investments

Shareholding in %

Equity

Net income/loss

Direct

Total

Smart Energy Code Company Limited, London/United Kingdom

Solarpark Freisen "Auf der Schwann" GmbH, Freisen

Solarpark St. Wendel GmbH, St. Wendel

SolarRegion RengsdorferLAND eG, Rengsdorf

Sole-Thermalbad Rilchingen GmbH & Co. KG, Kleinblittersdorf

SPAA Ltd, London/United Kingdom

St. Clements Services Limited, London/United Kingdom

Stadtmarketing-Gesellschaft Gelsenkirchen mbH, Gelsenkirchen

Stadtwerke Delitzsch GmbH, Delitzsch

Stadtwerke Detmold GmbH, Detmold

Stadtwerke ETO GmbH & Co. KG, Telgte

Stadtwerke Porta Westfalica GmbH, Porta Westfalica

Stadtwerke Sulzbach GmbH, Sulzbach

Stadtwerke Tecklenburger Land Energie GmbH, Ibbenbüren

Stadtwerke Tecklenburger Land GmbH & Co. KG, Ibbenbüren

Stadtwerke Völklingen Netz GmbH, Völklingen

Stadtwerke Völklingen Vertrieb GmbH, Völklingen

Stem Inc., Milbrae/USA

Store-X storage capacity exchange GmbH, Leipzig

SWT Stadtwerke Trier Versorgungs-GmbH, Trier

SWTE Verwaltungsgesellschaft mbH, Ibbenbüren

Technologiezentrum Jülich GmbH, Jülich

TechSee Augmented Vision Ltd., Herzliya/Israel

Telecom Plus plc, London/United Kingdom

TGZ Halle TECHNOLOGIE- UND GRÜNDERZENTRUM HALLE GmbH, Halle (Saale)

Transport- und Frischbeton-Gesellschaft mit beschränkter Haftung & Co.
Kommanditgesellschaft Aachen, Aachen

T-REX Group Inc., New York City/USA

Trianel Erneuerbare Energien GmbH & Co. KG, Aachen

Trianel GmbH, Aachen

Trinkaus Secondary GmbH & Co. KGaA, Düsseldorf

Umspannwerk Lübz GbR, Lübz

Union Group, a.s., Ostrava/Czech Republic

WASSERWERKE PADERBORN GmbH, Paderborn

Westly Capital Partners Fund III, L.P., Dover/USA

WiN Emscher-Lippe Gesellschaft zur Strukturverbesserung mbH, Herten

Windenergie Schermbeck-Rüste GmbH & Co. KG, Schermbeck

Windenergie Schermbeck-Rüste Verwaltungsgesellschaft mbH, Schermbeck

Windpark Jüchen GmbH & Co. KG, Essen

Windpark Mengerskirchen GmbH, Mengerskirchen

Windpark Saar GmbH & Co. Repower KG, Freisen

Windpark Saar 2016 GmbH & Co. KG, Freisen

xtechholding GmbH, Berlin

€ '000

367

1,126

314

1,859

15,595

31,495

33,567

16,208

11,431

799

16,387

7,301

7,210

262

54,663

1,432

223,483

14,544

390

64,750

83,938

1,685

90,068

24,105

1,149

154

474

2,253

3,013

9,165

4,091

€ '000

– 92

2,884

6,085

569

1,786

– 982

668

1,998

3,289

– 33,981

– 382

163

36,2832

146

– 1,112

– 4,133

487

– 272

– 280

143

297

410

– 189

1 Profit and loss-pooling agreement.
2 Figures from the Group's consolidated financial statements.
3 Newly founded, financial statements not yet available.
4 Control by virtue of company contract.

5 No control by virtue of company contract.
6 Significant influence via indirect investments.
7 Significant influence by virtue of company contract.
8 Structured entity pursuant to IFRS 10 and 12.

9 Immaterial.
10 Financial statements not available.
11 Profit and loss-pooling agreement with non-

Group companies.

Consolidated financial statements > List of shareholdings (part of the notes)

183

Changes in shareholding with change of control

Shareholding in %
31 Dec 2017

Shareholding in %
31 Dec 2016

Change

Additions to affiliated companies which are included in the consolidated financial
statements

Belectric France S.à.r.l., Vendres/France

Belectric GmbH, Kolitzheim

Belectric Israel Ltd., Be'er-Sheva/Israel

Belectric Italia S.R.L., Latina/Italy

Belectric Photovoltaic India Private Limited, Mumbai/India

Belectric PV Dach GmbH, Kolitzheim

Belectric Solar & Battery GmbH, Kolitzheim

Belectric Solar Ltd., Iver/United Kingdom

Dromadda Beg Wind Farm Limited, Tralee/Ireland

Essent EnergieBewust Holding B.V., 's-Hertogenbosch/Netherlands

hoch.rein Beteiligungen GmbH, Kolitzheim

Hof Promotion B.V., Eindhoven/Netherlands

innogy Beteiligungsholding GmbH, Essen

innogy Company Building GmbH, Berlin

innogy Evendorf Windparkbetriebsgesellschaft mbH, Hanover

Isoprofs B.V., Meijel/Netherlands

It's a beautiful world B.V., Amersfoort/Netherlands

Jurchen Technology GmbH, Helmstadt

Jurchen Technology India Private Limited, Mumbai/India

ka-tek GmbH, Kolitzheim

Koprivnica Opskrba d.o.o., Koprivnica/Croatia

Koprivnica Plin d.o.o., Koprivnica/Croatia

Padcon GmbH, Kitzingen

RWE Personeel B.V., Geertruidenberg/Netherlands

Solar Holding Poland GmbH, Kolitzheim

Volta Solar VOF, Heerlen/Netherlands

Additions to associates accounted for using the equity method

Belectric Gulf Limited, Abu Dhabi/UAE

Xelan SAS, Saint-Denis La Plaine/France

Transfers of affiliated companies which are included in the consolidated financial
statements to associates accounted for using the equity method

Stadtwerke Kamp-Lintfort GmbH, Kamp-Lintfort

Transfers of affiliated companies which are not included in the consolidated financial
statements to joint ventures accounted for using the equity method

Stromnetz Gersthofen GmbH & Co. KG, Gersthofen

Transfers of joint ventures accounted for using the equity method to affiliated
companies which are included in the consolidated financial statements

Triton Knoll Offshore Wind Farm Limited, Swindon/United Kingdom

Disposals of affiliated companies which are included in the consolidated financial
statements

Stadtwärme Kamp-Lintfort GmbH, Kamp-Lintfort

100

– 2

– 51

– 100

100

184 RWE Annual Report 2017

Changes in shareholding without change of control

Shareholding in %
31 Dec 2017

Shareholding in %
31 Dec 2016

Change

Affiliated companies which are included in the consolidated financial statements

Artelis S.A., Luxembourg/Luxembourg

NEW Smart City GmbH, Mönchengladbach

VSE Aktiengesellschaft, Saarbrücken

Associates accounted for using the equity method

medl GmbH, Mülheim an der Ruhr

100

– 10

Consolidated financial statements > Boards (part of the notes)

185

3.8 BOARDS (PART OF THE NOTES)

As of: 27 February 2018

Supervisory Board

Dr. Werner Brandt
Bad Homburg

Reinhold Gispert1
Worms

Chairman of the Group Works Council of RWE AG

Year of birth: 1960

Chairman of the Supervisory Board of ProSiebenSat.1 Media SE

Member since: 27 April 2017

Year of birth: 1954

Member since: 18 April 2013

Other appointments:

• ProSiebenSat.1 Media SE (Chairman)

• Siemens AG

Frank Bsirske1
Berlin

Deputy Chairman

Chairman of ver.di Vereinte Dienstleistungsgewerkschaft

Year of birth: 1952

Member since: 9 January 2001

Other appointments:

• Deutsche Bank AG

• Deutsche Postbank AG

•

innogy SE

- KfW Bankengruppe

Reiner Böhle1
Witten

Independent Works Council Representative

Year of birth: 1960

Member since: 1 January 2013

Sandra Bossemeyer1
Duisburg

Arno Hahn1,2
Waldalsgesheim

Chairman of the Group Works Council of RWE AG

Chairman of the General Works Council of innogy SE

Year of birth: 1962

Member from 1 July 2012 until 27 April 2017

Other appointments:

•

innogy SE (until 31 May 2017)

Andreas Henrich1
Mülheim an der Ruhr
Head of Human Resources at RWE AG

Year of birth: 1956

Member since: 20 April 2016

Prof. Dr.-Ing. Dr.-Ing. E. h. Hans-Peter Keitel
Essen

Former Chairman of the Executive Board of HOCHTIEF AG

Year of birth: 1947

Member since: 18 April 2013

Other appointments:

• Airbus Defence and Space GmbH

• National-Bank AG

• thyssenkrupp AG

• Voith GmbH & Co. KGaA (Chairman)

Chairwoman of the Works Council of RWE AG

- Airbus Group SE

Representative of the disabled

Year of birth: 1965

Member since: 20 April 2016

Ute Gerbaulet
Düsseldorf

General Partner of Bankhaus Lampe KG

Year of birth: 1968

Member since: 27 April 2017

Other appointments:

• Gerry Weber AG

- NRW.Bank

Mag. Dr. h. c. Monika Kircher
Pörtschach, Austria

Consultant

Year of birth: 1957

Member since: 15 October 2016

Other appointments:

- Andritz AG

- Austrian Airlines AG

- Kärntner Energieholding Beteiligungs GmbH (Chairwoman)

- KELAG-Kärntner Elektrizitäts AG

- Siemens AG Österreich

• Member of other mandatory supervisory boards.
-

Member of comparable domestic and foreign supervisory boards of
commercial enterprises.

1 Employee representative.
2 Information valid as of the date of retirement.

186 RWE Annual Report 2017

Martina Koederitz 2
Stuttgart

Peter Ottmann
Nettetal

Chairwoman of the Management of IBM Central Holding GmbH

Managing Director of Verband der kommunalen

Chairwoman of the Management of IBM Deutschland GmbH

RWE-Aktionäre GmbH

Chairwoman of the Management of IBM Deutschland Management &

Attorney, Former Chief Administrative Officer

Business Support GmbH

Managing Director of IBM Munich Center GmbH

Year of birth: 1964

Member from 20 April 2016 until 27 April 2017

Other appointments:

•

IBM Deutschland Research & Development GmbH

innogy SE

Monika Krebber1
Mülheim an der Ruhr

Year of birth: 1951

Member since: 20 April 2016

Other appointments:

• RW Holding AG

Günther Schartz
Wincheringen

Chief Administrative Officer of the District of Trier-Saarburg

Year of birth: 1962

Member since: 20 April 2016

Deputy Chairwoman of the General Works Council of innogy SE

Deputy Chairwoman of the Group Works Council of RWE AG
Year of birth: 1962

Other appointments:
• RW Holding AG (Deputy Chairman)

Member since: 20 April 2016

- A.R.T. Abfallberatungs- und Verwertungsgesellschaft mbH

Other appointments:

•

innogy SE

Harald Louis1
Jülich

(Chairman)

- Kreiskrankenhaus St. Franziskus Saarburg GmbH (Chairman)

- LBBW-Rheinland-Pfalz-Bank Verwaltungsrat (Deputy Member)

- Sparkasse Trier (Deputy Chairman)

- Sparkassenverband Rheinland-Pfalz

- Trierer Hafengesellschaft mbH

Chairman of the General Works Council of RWE Power AG

- Zweckverband Abfallwirtschaft Region Trier

Year of birth: 1967

Member since: 20 April 2016

Other appointments:

• RWE Power AG

Dagmar Mühlenfeld
Mülheim an der Ruhr

Former Mayor of Mülheim an der Ruhr

Year of birth: 1951

Member since: 4 January 2005

Other appointments:

• RW Holding AG

Dr. Erhard Schipporeit
Hanover

Independent Corporate Consultant

Year of birth: 1949

Member since: 20 April 2016

Other appointments:

• BDO AG

• Deutsche Börse AG (until 16 May 2018)

• Fuchs Petrolub SE

• Hannover Rück SE (group-level appointment at Talanx AG)

• HDI V. a. G.

•

innogy SE (Chairman)

• SAP SE

• Talanx AG

• Member of other mandatory supervisory boards.
-

Member of comparable domestic and foreign supervisory boards of
commercial enterprises.

1 Employee representative.
2 Information valid as of the date of retirement.

Consolidated financial statements > Boards (part of the notes)

187

Dr. Wolfgang Schüssel
Vienna, Austria

Marion Weckes1
Dormagen

Former Federal Chancellor of the Republic of Austria

Head of Unit, Dept. Mitbestimmungsförderung der

Year of birth: 1945

Member since: 1 March 2010

Other appointments:

- Adenauer Stiftung (Chairman of the Board of Trustees)

Hans-Böckler-Stiftung

Year of birth: 1975

Member since: 20 April 2016

Leonhard Zubrowski1
Lippetal

Chairman of the Group Works Council of RWE Generation SE

Year of birth: 1961

Member since: 1 July 2014

Other appointments:

• RWE Generation SE

Ullrich Sierau
Dortmund

Mayor of the City of Dortmund

Year of birth: 1956

Member since: 20 April 2011

Other appointments:

• Dortmunder Energie- und Wasserversorgung GmbH (Chairman)

• Dortmunder Stadtwerke AG (Chairman)
• KEB Holding AG (Chairman)

- KSBG Kommunale Verwaltungsgesellschaft GmbH

- Schüchtermann-Schiller’sche Kliniken

Bad Rothenfelde GmbH & Co. KG

- Sparkasse Dortmund (Chairman)

Ralf Sikorski1
Hanover

Member of the Main Executive Board of IG Bergbau, Chemie, Energie

Year of birth: 1961

Member since: 1 July 2014

Other appointments:

• CHEMIE Pensionsfonds AG (Chairman)

• KSBG Kommunale Beteiligungsgesellschaft GmbH & Co. KG

• Lanxess AG

• Lanxess Deutschland GmbH

• RAG AG

• RAG Deutsche Steinkohle AG

• RWE Generation SE

• RWE Power AG

• Member of other mandatory supervisory boards.
-

Member of comparable domestic and foreign supervisory boards of
commercial enterprises.

1 Employee representative.

188 RWE Annual Report 2017

Supervisory Board Committees

Executive Committee of the Supervisory Board
Dr. Werner Brandt (Chairman)

Frank Bsirske

Sandra Bossemeyer

Prof. Dr. Hans-Peter Keitel

Monika Krebber

Dagmar Mühlenfeld

Dr. Wolfgang Schüssel

Leonhard Zubrowski

Mediation Committee in accordance with Sec. 27,

Para. 3 of the German Co-Determination Act (MitbestG)
Dr. Werner Brandt (Chairman)

Frank Bsirske

Dr. Wolfgang Schüssel

Ralf Sikorski

Personnel Affairs Committee
Dr. Werner Brandt (Chairman)

Reiner Böhle

Frank Bsirske

Harald Louis

Peter Ottmann

Dr. Wolfgang Schüssel

Audit Committee
Dr. Erhard Schipporeit (Chairman)

Reinhold Gispert

Dr. Wolfgang Schüssel

Ullrich Sierau

Ralf Sikorski

Marion Weckes

Nomination Committee
Dr. Werner Brandt (Chairman)

Prof. Dr. Hans-Peter Keitel

Peter Ottmann

Strategy Committee
Dr. Werner Brandt (Chairman)

Frank Bsirske

Reinhold Gispert

Prof. Dr. Hans-Peter Keitel

Günther Schartz

Ralf Sikorski

NewCo IPO Committee
Dr. Werner Brandt (Chairman)

Frank Bsirske
Sandra Bossemeyer

Prof. Dr. Hans-Peter Keitel

Monika Krebber

Dagmar Mühlenfeld

Dr. Erhardt Schipporeit

Dr. Wolfgang Schüssel

Leonhard Zubrowski

Consolidated financial statements > Boards (part of the notes)

189

The Executive Board

Exiting members of the Executive Board

Dr. Rolf Martin Schmitz (Chief Executive Officer)
Chairman of the Executive Board of RWE AG since 15 October 2016

Uwe Tigges (Former Labour Director and Chief HR Officer)1
Member of the Executive Board of RWE AG until 30 April 2017

Member of the Executive Board of RWE AG since 1 May 2009,

appointed until 30 June 2021

Labour Director of RWE AG since 1 May 2017

Other appointments:

• Amprion GmbH

• RWE Pensionsfonds AG (Chairman)

- VfL Bochum 1848 Fußballgemeinschaft e. V.

Other appointments:

• Amprion GmbH

• RWE Generation SE (Chairman)

• RWE Power AG (Chairman)

• RWE Supply & Trading GmbH

• TÜV Rheinland AG

- Jaeger-Gruppe (Chairman)

- Kärntner Energieholding Beteiligungs GmbH

- KELAG-Kärntner Elektrizitäts-AG

Dr. Markus Krebber (Chief Financial Officer)
Member of the Executive Board of RWE AG since 1 October 2016,

appointed until 30 September 2019

Other appointments:

•

innogy SE

• RWE Generation SE

• RWE Pensionsfonds AG

• RWE Power AG

• RWE Supply & Trading GmbH (Chairman)

• Member of other mandatory supervisory boards.
-

Member of comparable domestic and foreign supervisory boards of
commercial enterprises.

1 Information valid as of the date of retirement.

190 RWE Annual Report 2017

3.9 INDEPENDENT AUDITOR’S REPORT

To RWE Aktiengesellschaft, Essen

Report on the audit of the consolidated financial statements
and of the group management report

Audit opinions
We have audited the consolidated financial statements of RWE

Auditors in Germany] (IDW). We performed the audit of the consoli-

dated financial statements in supplementary compliance with the

Aktiengesellschaft, Essen, and its subsidiaries (the Group), which com-

International Standards on Auditing (ISAs). Our responsibilities under

prise the statement of financial position as at 31 December 2017,

those requirements, principles and standards are further described

and the statement of profit or loss, statement of comprehensive in-

in the “Auditor’s Responsibilities for the Audit of the Consolidated

come, statement of cash flows and statement of changes in equity

Financial Statements and of the Group Management Report” section

for the financial year from 1 January to 31 December 2017, and

of our auditor’s report. We are independent of the group entities

notes to the consolidated financial statements, including a summary

in accordance with the requirements of European law and German

of significant accounting policies. In addition, we have audited the

commercial and professional law, and we have fulfilled our other

group management report of RWE Aktiengesellschaft, which is com-

German professional responsibilities in accordance with these

bined with the Company’s management report, for the financial year

requirements. In addition, in accordance with Article 10 (2) point (f)

from 1 January to 31 December 2017. We have not audited the con-
tent of those parts of the group management report listed in the

of the EU Audit Regulation, we declare that we have not provided
non-audit services prohibited under Article 5 (1) of the EU Audit

“Other Information” section of our auditor’s report in accordance

Regulation. We believe that the audit evidence we have obtained is

with the German legal requirements.

sufficient and appropriate to provide a basis for our audit opinions

on the consolidated financial statements and on the group manage-

In our opinion, on the basis of the knowledge obtained in the audit,

ment report.

• the accompanying consolidated financial statements comply, in

Key Audit Matters in the Audit of the Consolidated Financial

all material respects, with the IFRSs as adopted by the EU, and

the additional requirements of German commercial law pursuant

Statements
Key audit matters are those matters that, in our professional judg-

to § [Article] 315e Abs. [paragraph] 1 HGB [Handelsgesetzbuch:

ment, were of most significance in our audit of the consolidated

German Commercial Code] and, in compliance with these require-

financial statements for the financial year from 1 January to

ments, give a true and fair view of the assets, liabilities, and

31 December 2017. These matters were addressed in the context

financial position of the Group as at 31 December 2017, and of

of our audit of the consolidated financial statements as a whole,

its financial performance for the financial year from 1 January

and in forming our audit opinion thereon; we do not provide a

to 31 December 2017, and

separate audit opinion on these matters.

• the accompanying group management report as a whole provides

In our view, the matters of most significance in our audit were as

an appropriate view of the Group’s position. In all material respects,

follows:

this group management report is consistent with the consolidated

financial statements, complies with German legal requirements

Changes in segment reporting

and appropriately presents the opportunities and risks of future

Recoverability of goodwill

development. Our audit opinion on the group management report

Recognition and measurement of pension provisions

does not cover the content of those parts of the group manage-

Recognition and measurement of tax items

ment report listed in the “Other Information” section of our

auditor’s report.

Our presentation of these key audit matters has been structured in

Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that our

audit has not led to any reservations relating to the legal compli-

Matter and issue

ance of the consolidated financial statements and of the group man-

Audit approach and findings

agement report.

Reference to further information

each case as follows:

Basis for the Audit Opinions
We conducted our audit of the consolidated financial statements

Hereinafter we present the key audit matters:

and of the group management report in accordance with § 317 HGB

and the EU Audit Regulation (No. 537/2014, referred to subse-

quently as “EU Audit Regulation”) and in compliance with German

Changes in segment reporting
The executive directors of RWE Aktiengesellschaft made changes
to its internal management and reporting structures in finan-

Generally Accepted Standards for Financial Statement Audits prom-
ulgated by the Institut der Wirtschaftsprüfer [Institute of Public

cial year 2017. The former “Conventional Power Generation”
segment was divided into the “Lignite & Nuclear” and “European

Consolidated financial statements > Independent auditor’s report

191

Power” segments with effect as of 1 January. The “Lignite &

average cost of capital for the relevant cash-generating unit.

Nuclear” segment covers electricity generation in Germany

The impairment test resulted in the recognition of a write-down

using lignite and nuclear power, while the “European Power”

for the Retail United Kingdom cash-generating unit amounting

segment mainly comprises the electricity generation business in

to EUR 479 million. The outcome of these valuations is depend-

Germany, the UK, the Netherlands and Belgium using gas and

ent to a large extent on the estimates made by the executive

hard coal power plants. This required a redefinition of the

directors of the future cash inflows of the cash-generating units,

segments shown in the Group’s segment reporting. Changes

and on the respective discount rates and rates of growth employed

were also made to intra-Group trading relationships as a result

as well as on further assumptions. The valuation is therefore

of the new segmentation. The management approach required

subject to considerable uncertainty. Against this background

by IFRS 8 for the identification of segments involves the exercise

and due to the underlying complexity of the valuation, this

of judgment to a high degree. The changes to segment report-

matter was of particular significance in the context of our audit.

ing were therefore of particular significance in the context of

our audit.

As part of our audit, we evaluated the methodology used for

the purpose of performing the impairment tests and assessed

In the course of our audit, among other things we assessed

the calculation of the weighted average cost of capital, among

whether segment reporting in accordance with the requirements

other things. In addition, we assessed whether the future cash

of the management approach is consistent with the Company’s

inflows underlying the measurements together with the weight-

internal reporting and management structures. For this purpose,
we evaluated in particular the internal reporting to the Execu-

ed cost of capital used represent an appropriate basis for the
impairment tests overall. We evaluated the appropriateness of

tive Board and satisfied ourselves by inspecting the minutes of

the future cash inflows used in the calculations, among other

Executive Board meetings that the new segment structure corre-

things by comparing this data with the Group’s medium-term

sponds to the Company’s regular internal reporting. In addition,

plan and by reconciling it against general and sector-specific

we assessed the adjustments to the consolidation accounting

market expectations. In this context, we also assessed whether

entries required for the presentation of the new segments. In

the costs of Group functions were properly included in the re-

our view, the redefinition of the reportable segments has been

spective cash-generating unit. In the knowledge that even rela-

clearly documented and properly implemented overall.

tively small changes in the discount rate applied can in some

The RWE Group’s segment reporting is contained in the notes to
the consolidated financial statements in section “Other informa-

tion” in note “(29) Segment reporting”.

Recoverability of goodwill

cases have a material impact on the value of the entity calculat-

ed using this method, we also evaluated the parameters used to

determine the discount rate applied and assessed the measure-

ment model. Furthermore, we evaluated the sensitivity analyses

performed by the Company in order to evaluate any impairment

risk (carrying amount higher than recoverable amount) in the

In the consolidated financial statements of RWE Aktienge-

event of a reasonably possible change in a material assumption

sellschaft, goodwill amounting to EUR 11.2 billion (16 % of con-

underlying the measurement. Overall, the measurement para-

solidated total assets) is reported under the balance sheet item

meter and assumptions used by the executive directors are in line

“Intangible assets”. Goodwill is tested for impairment annually

with our expectations and are also within the ranges considered

or when there are indications of impairment, to determine any

by us to be reasonable.

possible need for write-downs.

The carrying amounts of the relevant cash-generating units, in-

The Company’s disclosures relating to goodwill are contained in
the notes to the consolidated financial statements in section

cluding goodwill, are compared with the corresponding recover-

“Notes to the Balance Sheet” in note “(10) Intangible assets”.

able amounts in the context of the impairment tests. The recov-

erable amount is generally calculated on the basis of fair value

less costs of disposal. The impairment tests are performed at

the level of the cash-generating units or groups of cash-generat-

ing units to which the respective goodwill is allocated. The

measurements to calculate the fair value less costs of disposal

carried out for the purposes of the impairment tests are based

on the present values of the future cash flows derived from the

planning projections for the next three years (medium-term

plan) prepared by the executive directors and acknowledged by

the supervisory board. In doing so, expectations relating to fu-

ture market developments and country-specific assumptions

about the performance of macroeconomic indicators are also

taken into account. Present values are calculated using discount-
ed cash flow models. The discount rate applied is the weighted

192 RWE Annual Report 2017

Recognition and measurement of pension provisions

porary differences in the statement of financial position that will

In the consolidated financial statements of RWE Aktienge-

not be realized until future financial years. Furthermore, the

sellschaft provisions for pensions and similar obligations are re-

“Deferred taxes” balance sheet line item includes under

ported under the balance sheet item “Provisions”. The pension

“Non-current assets” recognized claims for tax reductions

provisions comprise obligations from defined benefit pension

amounting to EUR 340 million, resulting from loss carryforwards

plans amounting to EUR 25.3 billion, plan assets of EUR 20.0 bil-

that based on the Company’s executive director’s estimates can

lion and a reported surplus of plan assets over benefit obliga-

be utilized in the future. The measurements underlying the tax

tions of EUR 0.1 billion. The obligations from defined benefit

items recognized are based, to the extent that insufficient de-

pension plans were measured using the projected unit credit

ferred tax liabilities are available, on the expected future taxable

method. This requires assumptions to be made in particular

earnings, which are primarily derived on the basis of the medi-

about long-term rates of growth in salaries and pensions, aver-

um-term business plans prepared by the executive directors.

age life expectancy, and staff turnover. The discount rate must

The result of these measurements depends to a large extent on

be determined by reference to market yields on high-quality cor-

the executive directors’ estimation of future financial perfor-

porate bonds with matching currencies and consistent maturi-

mance, and is therefore subject to material uncertainties.

ties. This usually requires the data to be extrapolated, since

Against this background, the recognition and measurement of

there is an insufficient number of long-term corporate bonds.

tax items overall was of particular significance in the context of

The plan assets are measured at fair value, which in turn in-

our audit.

volves making estimates that are subject to uncertainties.

In our view, these matters were of particular significance in the

the determination, accounting treatment and measurement of

context of our audit because the recognition and measurement

deferred taxes and for the impairment testing of the tax items

of this significant item in terms of its amount are based to a ma-

recognized, among other things. We also assessed whether the

terial extent on estimates and assumptions made by the Compa-

planning projections underlying the measurements constitute

As part of our audit, we evaluated the methodology used for

ny’s executive directors.

For the purposes of our audit, we firstly assessed whether the
criteria for recognition as defined benefit or defined contribu-

an appropriate basis for the measurements. In addition, we eva-

luated whether the items were properly accounted for either

through profit or loss in the income statement or in equity in

the statement of comprehensive income, in accordance with the

tion pension commitments were met and evaluated the actuarial

respective underlying transaction. Based on our audit procedures,

expert reports obtained and the professional qualifications of

we were able to satisfy ourselves that the methods applied and

the external actuarial experts. We also examined the specific

measurement assumptions made by the executive directors for

features of the actuarial calculations and evaluated the numeri-

the purpose of calculating and recognizing tax items, including

cal data, the actuarial parameters and the valuation methods on

the impairment testing of the deferred tax items, are justified

which the valuations were based for compliance with standards

and sufficiently documented.

and appropriateness, in addition to other procedures. In addi-

tion, we analyzed the changes in the obligation and the cost

The Company’s disclosures relating to income taxes are con-

components in accordance with actuarial expert reports in the

tained in the notes to the consolidated financial statements in

light of changes occurring in the valuation parameters and the

sections “Notes to the Income Statement” in note “(9) Taxes on

numerical data, and assessed their plausibility. For the audit of

income” and “Notes to the Balance Sheet” in note “(17) De-

the fair value of the plan assets, we obtained bank and fund

ferred taxes”.

confirmations and evaluated the methods on which the respec-

tive valuation was based and the valuation parameters applied.

Based on our audit procedures, we were able to satisfy our-

selves that the estimates applied and assumptions made by the

executive directors are justified and sufficiently documented.

The Company’s disclosures relating to the pension provisions
are contained in the notes to the consolidated financial state-

ments in section “Notes to the Balance Sheet” in note “(23) Pro-

visions”.

Recognition and measurement of tax items

In the consolidated financial statements of RWE Aktienge-

sellschaft, taxes on income decreased income before tax by

24 %. A material portion of this net figure for tax income and
expenses results from the recognition of deferred taxes on tem-

Consolidated financial statements > Independent auditor’s report

193

Other information
The executive directors are responsible for the other information.

of accounting unless there is an intention to liquidate the Group or

to cease operations, or there is no realistic alternative but to do so.

The other information comprises the following non-audited parts of

the group management report:

Furthermore, the executive directors are responsible for the prepara-

tion of the group management report that, as a whole, provides an

• the statement on corporate governance pursuant to § 289f HGB

appropriate view of the Group’s position and is, in all material re-

and § 315d HGB included in section 1.8 of the group manage-

spects, consistent with the consolidated financial statements, com-

ment report

plies with German legal requirements, and appropriately presents

the opportunities and risks of future development. In addition, the

• the separate non-financial group report pursuant to § 315b

executive directors are responsible for such arrangements and

Abs. 3 HGB

measures (systems) as they have considered necessary to enable the

preparation of a group management report that is in accordance

The other information comprises further the remaining parts of the

with the applicable German legal requirements, and to be able to

annual report – excluding cross-references to external information –

provide sufficient appropriate evidence for the assertions in the

with the exception of the audited consolidated financial statements,

group management report.

the audited group management report and our auditor’s report.

The supervisory board is responsible for overseeing the Group’s

Our audit opinions on the consolidated financial statements and on
the group management report do not cover the other information,

financial reporting process for the preparation of the consolidated
financial statements and of the group management report.

and consequently we do not express an audit opinion or any other

form of assurance conclusion thereon.

In connection with our audit, our responsibility is to read the other

Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements and of the Group Management Report
Our objectives are to obtain reasonable assurance about whether

information and, in so doing, to consider whether the other informa-

the consolidated financial statements as a whole are free from mate-

tion

rial misstatement, whether due to fraud or error, and whether the

group management report as a whole provides an appropriate view

•

is materially inconsistent with the consolidated financial state-

of the Group’s position and, in all material respects, is consistent

ments, with the group management report or our knowledge ob-

with the consolidated financial statements and the knowledge ob-

tained in the audit, or

tained in the audit, complies with the German legal requirements

and appropriately presents the opportunities and risks of future de-

• otherwise appears to be materially misstated.

velopment, as well as to issue an auditor’s report that includes our

audit opinions on the consolidated financial statements and on the

If, based on the work we have performed, we conclude that there is

group management report.

a material misstatement of this other information, we are required

to report that fact. We have nothing to report in this regard.

Reasonable assurance is a high level of assurance, but is not a

guarantee that an audit conducted in accordance with § 317 HGB

Responsibilities of the Executive Directors and the Supervisory

and the EU Audit Regulation and in compliance with German Generally

Board for the Consolidated Financial Statements and the Group
Management Report
The executive directors are responsible for the preparation of the

Accepted Standards for Financial Statement Audits promulgated by

the Institut der Wirtschaftsprüfer (IDW) and supplementary compli-

ance with the ISAs will always detect a material misstatement. Mis-

consolidated financial statements that comply, in all material re-

statements can arise from fraud or error and are considered material

spects, with IFRSs as adopted by the EU and the additional require-

if, individually or in the aggregate, they could reasonably be expect-

ments of German commercial law pursuant to § 315e Abs. 1 HGB

ed to influence the economic decisions of users taken on the basis

and that the consolidated financial statements, in compliance with

of these consolidated financial statements and this group manage-

these requirements, give a true and fair view of the assets, liabili-

ment report.

ties, financial position, and financial performance of the Group. In

addition the executive directors are responsible for such internal

We exercise professional judgment and maintain professional skepti-

control as they have determined necessary to enable the prepara-

cism throughout the audit. We also

tion of consolidated financial statements that are free from material

misstatement, whether due to fraud or error.

•

Identify and assess the risks of material misstatement of the

consolidated financial statements and of the group management

In preparing the consolidated financial statements, the executive

report, whether due to fraud or error, design and perform audit

directors are responsible for assessing the Group’s ability to continue

procedures responsive to those risks, and obtain audit evidence

as a going concern. They also have the responsibility for disclosing,

that is sufficient and appropriate to provide a basis for our audit

as applicable, matters related to going concern. In addition, they are
responsible for financial reporting based on the going concern basis

opinions. The risk of not detecting a material misstatement result-
ing from fraud is higher than for one resulting from error, as fraud

194 RWE Annual Report 2017

may involve collusion, forgery, intentional omissions, misrepresen-

prospective information and on the assumptions used as a basis.

tations, or the override of internal control.

There is a substantial unavoidable risk that future events will dif-

fer materially from the prospective information.

• Obtain an understanding of internal control relevant to the audit

of the consolidated financial statements and of arrangements and

We communicate with those charged with governance regarding,

measures (systems) relevant to the audit of the group manage-

among other matters, the planned scope and timing of the audit

ment report in order to design audit procedures that are appropri-

and significant audit findings, including any significant deficiencies

ate in the circumstances, but not for the purpose of expressing an

in internal control that we identify during our audit.

audit opinion on the effectiveness of these systems.

• Evaluate the appropriateness of accounting policies used by the

that we have complied with the relevant independence require-

executive directors and the reasonableness of estimates made by

ments, and communicate with them all relationships and other mat-

the executive directors and related disclosures.

ters that may reasonably be thought to bear on our independence,

We also provide those charged with governance with a statement

and where applicable, the related safeguards.

• Conclude on the appropriateness of the executive directors’ use

of the going concern basis of accounting and, based on the audit

From the matters communicated with those charged with govern-

evidence obtained, whether a material uncertainty exists related

ance, we determine those matters that were of most significance in

to events or conditions that may cast significant doubt on the
Group’s ability to continue as a going concern. If we conclude

the audit of the consolidated financial statements of the current pe-
riod and are therefore the key audit matters. We describe these mat-

that a material uncertainty exists, we are required to draw attention

ters in our auditor’s report unless law or regulation precludes public

in the auditor’s report to the related disclosures in the consoli-

disclosure about the matter.

dated financial statements and in the group management report

or, if such disclosures are inadequate, to modify our respective

audit opinions. Our conclusions are based on the audit evidence

obtained up to the date of our auditor’s report. However, future

events or conditions may cause the Group to cease to be able to

continue as a going concern.

• Evaluate the overall presentation, structure and content of the

consolidated financial statements, including the disclosures, and

whether the consolidated financial statements present the under-

lying transactions and events in a manner that the consolidated

financial statements give a true and fair view of the assets, liabili-

ties, financial position and financial performance of the Group in

compliance with IFRSs as adopted by the EU and the additional

requirements of German commercial law pursuant to § 315e

Abs. 1 HGB.

• Obtain sufficient appropriate audit evidence regarding the finan-

cial information of the entities or business activities within the

Group to express audit opinions on the consolidated financial

statements and on the group management report. We are respon-

sible for the direction, supervision and performance of the group

audit. We remain solely responsible for our audit opinions.

• Evaluate the consistency of the group management report with

the consolidated financial statements, its conformity with German

law, and the view of the Group’s position it provides.

• Perform audit procedures on the prospective information present-

ed by the executive directors in the group management report.

On the basis of sufficient appropriate audit evidence we evaluate,

in particular, the significant assumptions used by the executive

directors as a basis for the prospective information, and evaluate

the proper derivation of the prospective information from these
assumptions. We do not express a separate audit opinion on the

Consolidated financial statements > Independent auditor’s report

195

Other legal and regulatory requirements

Further Information pursuant to Article 10 of the EU Audit
Regulation
We were elected as group auditor by the annual general meeting

on 27 April 2017. We were engaged by the supervisory board on

15 May 2017. We have been the group auditor of RWE Aktiengesell-

schaft, Essen, without interruption since the financial year 2001.

We declare that the audit opinions expressed in this auditor’s report

are consistent with the additional report to the audit committee

pursuant to Article 11 of the EU Audit Regulation (long-form audit

report).

German Public Auditor responsible for
the engagement

The German Public Auditor responsible for the engagement is

Ralph Welter.

Essen, 27 February 2018

PricewaterhouseCoopers GmbH

Wirtschaftsprüfungsgesellschaft

Michael Reuther

Wirtschaftsprüfer

Ralph Welter

Wirtschaftsprüfer

(German Public Auditor)

196 RWE Annual Report 2017

3.10 INFORMATION ON THE AUDITOR

The consolidated financial statements of RWE AG and its subsidia-

ries for the 2017 fiscal year – consisting of the Group balance

sheet, Group income statement and statement of comprehen sive

income, Group statement of changes in equity, Group cash flow

statement and Group notes to the financial statements – were au-

dited by the auditing company PricewaterhouseCoopers GmbH

Wirtschaftsprüfungsgesellschaft.

The auditor at PricewaterhouseCoopers GmbH Wirtschaftsprüfungs-

gesellschaft responsible for RWE is Mr Ralph Welter. Mr Welter has

performed this function in four previous audits of RWE.

Consolidated financial statements > Five-year overview

197

FIVE-YEAR OVERVIEW

Five-year overview
RWE Group

External revenue

Income

Adjusted EBITDA

Adjusted EBIT

Income before tax

Net income /RWE AG shareholders’ share in income

Earnings per share

Adjusted net income

Adjusted net income per share

Cash flow /capital expenditure /depreciation and
amortisation

Cash flows from operating activities

Free cash flow1

Free cash flow per share1

Depreciation, amortisation, impairment losses and
asset disposals

Degree of asset depreciation

Asset /capital structure

Non-current assets

Current assets

Balance sheet equity

Non-current liabilities

Current liabilities

Balance sheet total

Equity ratio

Net financial debt

Net debt

Leverage factor

Workforce

Workforce at year-end3

Research & development

Operating R&D costs

Emissions balance

CO2 emissions

Free allocation of CO2 certificates

Shortage of CO2 certificates4

Specific CO2 emissions

2017

2016

2015

2014

2013

€ million

44,585

45,833

48,090

48,468

52,425

€ million

€

€ million

€

€ million

€

€ million

5,756

3,646

3,056

1,900

3.09

1,232

2.00

– 1,754

– 3,849

– 6.26

2,886

71.0

45,694

23,365

11,991

36,774

20,294

69,059

17.4

6,301

5,403

3,082

– 5,807

– 5,710

– 9.29

777

1.26

2,352

809

1.32

6,857

71.4

45,911

30,491

7,990

39,646

28,766

76,402

10.5

1,659

7,017

3,837

– 637

– 170

– 0.28

1,125

1.83

3,339

441

0.72

5,838

65.6

51,453

27,881

8,894

45,315

25,125

79,334

11.2

7,353

7,131

4,017

2,246

1,704

2.77

1,282

2.09

5,556

2,311

3.76

3,369

62.6

54,224

32,092

11,772

46,324

28,220

86,316

13.6

8,481

20,227

22,709

25,463

30,972

7,904

5,369

– 2,016

– 2,757

– 4.49

2,314

3.76

4,803

960

1.56

8,121

61.6

56,905

24,476

12,137

47,383

21,861

81,381

14.9

10,320

30,727

3.5

4.2

3.6

3.82

3.52

59,547

58,652

59,762

59,784

64,896

€ million

182

165

101

110

151

million
metric tons

metric tons /
MWh

132.4

148.3

150.8

155.2

163.9

1.6

4.5

5.6

5.8

7.4

129.4

142.6

143.9

148.3

156.5

0.655

0.686

0.708

0.745

0.751

1 New definition; see explanation on page 56.
2 Adjusted figure; see page 64 of the 2014 Annual Report.
3 Converted to full-time positions.
4 As Turkey does not participate in the European Union Emissions Trading System, we do not need emission allowances for our CO2 emissions in that country.

198 RWE Annual Report 2017

IMPRINT

RWE Aktiengesellschaft
Huyssenallee 2

45128 Essen

Germany

Phone

+49 201 12-00

Fax

+49 201 12-15199

E-mail

contact@rwe.com

Investor Relations:
Phone

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Fax

+49 201 12-15033

Internet www.rwe.com/ir

E-mail

invest@rwe.com

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Phone

Fax

+49 201 12-22115

For annual reports, interim reports, interim statements and
further information on RWE, please visit us on the internet at

www.rwe.com.

This annual report was published on 13 March 2018. This is a trans-

lation of the German annual report. In case of divergence from the

German version, the German version shall prevail.

Typesetting and production:
MPM Corporate Communication Solutions, Mainz, Germany

www.mpm.de

Photography:
André Laaks, Essen, Germany

Printing:
D+L Printpartner GmbH, Bocholt, Germany

Translation:
Olu Taylor Translation & Interpretation Services, Geretsried, Germany

Proofreading:
Nicola Thackeray, Swindon, UK

RWE is a member of DIRK –

the German Investor Relations Association.

Further informationen

Financial Calendar
2018/2019

26 April 2018

2 May 2018

15 May 2018

Annual General Meeting

Dividend payment

Interim statement on the first quarter of 2018

14 August 2018

Interim report on the first half of 2018

14 November 2018

Interim statement on the first three quarters of 2018

14 March 2019

Annual report for fiscal 2018

3 May 2019

8 May 2019

15 May 2019

Annual General Meeting

Dividend payment

Interim statement on the first quarter of 2019

14 August 2019

Interim report on the first half of 2019

14 November 2019

Interim statement on the first three quarters of 2019

The Annual General Meeting (until the beginning of the Q & A session) and all
events concerning the publication of our financial reports are broadcast live
on the internet and recorded. We will keep the recordings on our website for
at least twelve months.

RWE Aktiengesellschaft
Huyssenallee 2
45128 Essen
Germany